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Prices stay firm on cotton market
KARACHI, April 14: Cotton prices on Tuesday stayed
firm around the previous levels but alarm bell
rang among ginners after New York futures fell
below the crucial level of 60 cents per lb.
"It may now be pretty difficult to hold the price
line in the backdrop of negative fallout of the
bearish price outlook," says a leading ginner, who
still holds a sizable unsold stock. "The absence
of spinners from the market could prompt selling
from the weak-holders and the consequent decline
in prices."
New York cotton futures on Monday fell by
limit-losses of 2.95 cents per lb for both the
ruling May and the forward July settlements at
58.56 and 60.69 cents, respectively.
Some leading spinners say the fall of New York
cotton futures below the 60-cent level is welcomed
irrespective of the fact whether it makes them
more competitive or not, some brokers said.
"We are weighing the price differential between
the local and foreign stuff before resuming fresh
buying," spinners say. "If world prices fall
further we will make fresh forward covering
purchases."
The current steep fall in New York cotton futures
on speculative selling could make the local
spinners more competitive on the export front if
prices fall further.
"An immediate negative fallout on the local prices
may not be visible as the ginners will try to
maintain a status quo at least for the near-term
after keeping off the arena," one broker predicted
but said, "if the current bear-run on world prices
further intensified it could unnerve the spinners
and the consequent panic selling."
According to market sources, the spinners have to
import about 2m bales of lint to make up the
expected local crop shortfall against which
leading among them had already imported about 1.2m
bales so far.
Owing to modernization and expansion programme
undertaken by the textile sector during the last
three years, its annual consumption intake has
risen to 12m bales plus, they added.
Official spot rates remained pegged at the last
levels and may be lowered in line with the world
prices during the next couple of sessions. Ready
offtake was modest totalling about 2,000 bales,
the following being some of the notable deals: 400
bales, Sakrand at Rs2,400; and 800 bales,
Sadiqabad also at Rs2,400.
The following are Tuesday's new crop Karachi
Cotton Association (KCA) official spot rates for
local dealings in Pak rupees for base grade 3
staple length 1-1/32" micronair value between 3.8
to 4.9 NCL.
Rate
for Exgin
price Ex-gin price
including
Sales Tax
Upcountry
Expenses Spot rate ex-Karachi
including Sales
Tax @ 15%
37.32 kgs 2,850 3,277.50 50 3,327.50
Equivalent
40 kgs 3,054 3,512.10 50 3,562.10.
The DAWN
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Pakissan.com; Advisory Point
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