KARACHI, Feb 20: Cotton prices on Thursday soared to a decade’s peak level on Thursday as spinners and mills indulged in panic buying and tried to grab the floating stock well beyond their export parity levels.
Some big contamination-free lots were sold as higher as Rs2,500 per maund, which means Rs3,100 per 40 kg, surpassing the previous high mark of Rs3,000 per 40 kg.
“Lint prices had soared to a record high of Rs3,000 over a decade ago when the total crop figure fell to 8.5m bales in late 80s and early 90s generating panic buying from the spinners and mills”, brokers said.
Having large export orders for textiles and worried over the future supply position, spinners were not inclined to take even a calculated risk and resorted to panic buying and in the process prices rose to a record high.
“I don’t think prices had already hit the peak,” one leading broker predicts “spinners who had made forward sales of textiles and yarn are not inclined to default on their export commitments and that will mean they will dance to the tune of ginners”.
The Trading Corporation of Pakistan (TCP), which had re-entered the market a couple of days back and purchased a couple of lots around Rs2,400 per 40 kg, may not like to enter the arena and will allow spinners and mills to outwit each other to the benefit of ginners.
“We are already paying more than the TCP offers to the ginners for quality lint,” one spinner claims adding “the TCP may not like to join the mad rush for the lint and stay away”.
In the ready section, there was a virtual run on the fine lots as spinners and mills were not inclined to say no to any of the offers being made by the ginners.
The interesting feature was that bulk of the business comprised big lots above 2,000 bales as financially sound spinners were out to cover their forward positions irrespective of the price tag.
It was in this background that official spot rates were upped by another Rs15 but in physical trading most of the deals were done well above them.
New York cotton futures showed mixed trend. While the maturing March contracts fell by 0.4 cents, the ruling May rose 0.40 cents at 52.00 and 57.33 cents per lb respectively.
Ready offtake was large at 25,000 bales, the following being some of notable deals;
SINDH TYPE: 1,200 bales, Dharki at Rs2,425, 2,000 bales, at Rs2,475, 1,400 bales upper Sindh at Rs2,450, 1,200 bales, Khipro at Rs2,375 and 400 bales, Shahdadpur at Rs2,400.
PUNJAB VARIETY: 3,000 bales, Bahawalpur at Rs2,425, 3,000 bales, Ahmedpur East at Rs2,475, 3,800 bales, Rahimyar Khan at Rs2,500, 2,000 bales also at the same rate and 2,000 bales, Khanpur at Rs2,450.