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Cotton market outlook remains cheerless
KARACHI, March 27: The cotton market passed
another dull and cheerless day on Friday when both
the buyers and sellers remained glued to the
sidelines.
Thus holiday feeling prevailed in the market with
thin attendance in the market.
There was general perception that new crop phutti,
whose minimum support price has been raised by
Rs75 per 40 kg, from Rs850 to Rs925 may lend a
bullish tenor to the lint price in the coming
weeks.
It remains to be seen how the spinners react to
it. They are already reluctant to pay the
prevailing price on the ground that it is above
their parity level idea.
The step apparently taken to favour the growers
who have already made a killing this season by
selling phutti at Rs1,650 per 40 kg, in
anticipation of heavy crop damage.
But at the losing end will be ginners and
spinners. Ginners are under pressure from the
spinners to reduce lint prices further because of
the bearish world outlook due to excess of
supplies over demand but they are resisting the
pressure because their cost of production has gone
very high because of abnormal hike in phutti
price.
No wonder therefore that they are saddled with
heavy unsold stocks which if not cleared in time,
will force them to face serious resource crunch.
They are already under pressure from banks for
loan adjustment while growers are forcing them to
pay for the phutti sol to them on deferred payment
basis.
Thus the higher phutti price may prove to be a
double edged sword for them. There are no two
opinions now about the size of the domestic crop,
which is likely to exceed 10 million bales
throwing cold water on the optimism of the ginners
about price hike because of shortfall in the crop.
Spinners are taking the cue from the global market
where prices are tending downwards because of
abundance of supplies. They cannot afford to pay
above the export parity of yarn. This explains the
present buyer-seller standoff, which is unlikely
to end soon.
Official spot rate remained steady at Rs2,975.
Ready business stood at 1,000 bales of Rahimyar
Khan which were sold at Rs3,000.
The News International, Pakistan |
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Pakissan.com; Advisory Point
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