Cotton prices plunged further down on Wednesday due to renewed selling pressure, keeping the leading spinners and exporters away from the proceedings. But some millers were able to pick up small lot deals at the falling prices to meet their near-future demand.
Floor brokers said that slow demand for cotton yarn is causing adverse impact on the cotton prices as spinners are avoiding holding ‘long position’ in their cotton inventory.
After experiencing an upward trend throughout last week, there was sudden change in the undertone of the market with willing sellers coming forward and the prices going down slightly on Tuesday.
Floor brokers said that the availability of quality lint is becoming difficult with each passing day and lower quality cotton is fetching lesser price. There are reports that very little phutti (seed cotton) is left in the cotton fields while the ginners’ stocks are also depleting fast.
Cotton prices have seen an increase by 10% in just about a month over buoyant market outlook. The uptrend in the prices of fibre crop is supported with good export orders as well as strong demand for domestic consumption with farmers releasing the cotton in a staggered manner, who are holding on to the crop expecting the prices to move up further.
The Pakistan cotton prices saw an upward trend on Saturday amid brisk activity as the result of strong demand from leading spinners and some exporters. The prices touched seasonal high at Rs7,250 per maund on strong demand, with many deals entered on conditional basis reaching as high as Rs7,600 per maund.
The Karachi Cotton Association spot rates remained steady at previous level and trading on ready counter was fairly brisk.
Cotton prices rose higher on Thursday as buying interest revives from leading spinners. The ginners who had been reluctant to dispose of their stocks readily obliged buyers at higher price calls. However, trading remained focused on quality lint as spinners were keen to build upon their stocks to meet expected higher export commitments owing to free-market access to European Union and larger orders booked in Heimtextil fair in Germany, brokers said.
Analysts believe that higher off-take of cotton from spinners earlier this season has now left little stock with ginners.
With ginners asking higher prices for quality lint amid firm demand from millers, trading activity on Wednesday cotton market failed to gain momentum.
Brokers said that prices remained on the higher side due to tight phutti supply and strong demand for lint from spinners. They added that presently phutti stocked by growers is finding its way to ginneries, otherwise, very little has been left behind in the cotton fields.
Cotton prices saw an upward trend due to short phutti (seed cotton) supply and ginners demanding higher rates on Wednesday. Trading activity continued to remain dull and listless as spinners reluctant to pay higher prices.
Another reason which pushed cotton prices up was a large participation of Pakistani textile sector in Heimtexil fair being held from Jan 8 to 11 in Frankfurt, Germany.
They added that the expectations that 226 companies from Pakistan displaying their textile products in the fair could get large export orders are presently inducing sentiment.
Trading of natural fibre was seen due to decrease in the cotton arrival. In the past few days cotton arrivals have decreased from 65,000 bales to 50,000 bales. According to a Rajkot-based ginner, farmers are holding back kapas and they are not willing to sell at lower price.
With the limited cotton arrival, price of Natural fibre increased by Rs200 for a candy of 356 kg. Kapas or raw cotton prices also gained.
According to brokers, demand emerged from domestic mills and exporters also began to buy to meet their immediate needs.
The US cotton future fell to a new nine-and-a-half-month low on 14 November, thus giving back the previous day's gains as demand remained poor amidst rising inventory. The concerns about oversupplies still hang in balance. The most-active March cotton contract on the ICE Futures US declined to an intraday low of US cents 77.37 per pound, its weakest since mid-January. Prices settled down 1.4% to US cents 77.46 per pound.
