KARACHI, Oct 24: Cotton prices on Thursday rose sharply higher as spinners and mills indulged in panic buying followed by reports of a short crop owing to damage caused by the pest attack in the major growing areas of the Punjab.
Both spinners and mills have purchased about 35,000 bales during the last two sessions amid fears of further price escalation, dealers said.
“Strong rumour of a short crop below 10m bales may not be correct but those who coined it managed to net in higher profits just in one go”, a cotton specialist Naseem Usman said.
He said reports of pest attack in some areas of the southern Punjab cotton belt are correct but the extent of the damage to the standing crop appears to be on the higher side.
However, the panic, which has gripped the spinners and the mills tells a different story. “They are not fools to resort to panic buying without having ascertained the damage to crop as they have their own efficient crop survey network”, market sources said.
The fact that big-lot business including 4,000 to 5,400 lots tells all is not well on the crop front as was also noted by the Pakistan Cotton Ginners Association (PCGA), which showed a decline of about 2.5 per cent in arrivals of phutti for the last fortnight.
This perception is also reinforced by the spinner willingness to corner stocks of phutti at the seasonal peak level of Rs2,150 per maund.
“We don’t think the price flare-up could be contained even by the higher arrival figures of phutti for the current fortnight ending on Oct 31”, leading cotton analysts said and predicted panic mill buying during the coming sessions could further fuel the price flare-up.
It was in this background that the official spot rates were upped by Rs50 to Rs2,050 per maund without 15 per cent sales tax.
New York cotton futures also rose further by 0.48 and 0.42 cents per lb at 45.21 and 47.55 cents per lb for both the ruling December and the distant March settlements respectively.
Ready offtake was fairly brisk and amounted to about 35,000 bales. The following being some of the important deals:
SINDH TYPE: 100 bales, Shahdadpur at Rs1,965, 400 bales, Tando Adam at Rs1,965, 400 bales, at Rs1,960, 200 bales, Sinjoro at Rs1,975, 400 bales, Nawabshah at Rs2,000, 2,000 bales, at Rs2,030, and 200 bales, Sanghar at Rs1,970 and 800 bales, D.G.Khan at Rs2,150.
PUNJAB VARIETY: 200 bales, Khanewal at Rs2,120, 200 bales, Jampur at Rs2,100, 400 bales, Lodharan at Rs2,100, 400 bales, Bahawalpur at Rs2,100, 2,000 bales, Hasilpur at Rs2,100, 1,000 bales, Liaquatpur at Rs2,100, and 1,000 bales, Haroonabad at Rs2,100.00.
The following are some of the deals gone through late on Wednesday night: 1,000 bales, Alipur at Rs2,050, 1,400 bales, Ahmedpur East at Rs2,050 to Rs2,100, 5,400 bales, Lodharan at Rs2,050 to Rs2,100, 4,000 bales, Rajanpur, 4,400 bales, Bahawalpur, also at the same rate, 1,000 bales, each Sadiqabad, Khanpur and Fazalpur at Rs2,100 and 2,000 bales, Nurpur Nauranga also at Rs2,100.