Cotton prices Rs5,060 per maund (Highest)

Newly minted Cotton
Originally uploaded by Ameer Hamza

KARACHI: Cotton prices on Wednesday soared to an all-time peak of Rs5,060 per maund on panic mill buying triggered in sympathy of another global price flare-up, analyst Naseem Usman said.

Quoting ginner sources, he said some of the forward deals on one month and 7-month credit from Dharki were finalised at Rs5,500 per maund.

But some other leading cotton analysts blamed the textile sector for the latest unprecedented price rise.

The market sources questioned the wisdom behind signing of forward deals for the still unsown cotton at Rs5,500 per maund as many crop basics could change during the intervening seven months.

The current spinner move linked to prices could well lead to the closure of the weaker links of the textile giants, they said, adding the grower will switch to cotton at the cost of other essential crops notably wheat.

“If the current price flare-up is sustained it could cause the virtual shutdown of several textile and spinning units,” warned a leading spinner.

The latest price flare-up was triggered by near-panic speculative buying in the New York futures by those countries which have harvested short crop under the lead of China, he said.

The New York cotton futures rose by 3.00 and 2.22 cents at 72.16 and 72.98 cents per lb for both the ruling March and the forward May contracts, respectively.

The current crop production is expected to touch the high mark of 13m bales, which is well below the annual consumption needs of the textile sector owing to a major breakthrough on the export front but in no way warrants speculative rise in lint prices, leading floor brokers said.

Official spot rates were quoted higher by Rs75 at Rs4,700 but in the ready section most of the deals were done well above them.

Mill ready off-take was on the higher side and totalled about 30,000 bales, the following being some of the notable deals.

SINDH TYPE:

2,193 bales, Dharki at Rs4,830, 600 bales each, Dharki on one and two month credit at Rs4,980 and Rs5,060, and 400 bales at Rs4,900, 3,000 bales, Khairpur at Rs4,940, delivery on March 15, and 3,200 bales, at Rs4,950.

PUNJAB VARIETY:

1,000 bales each and 1,200 bales, Rahimyar Khan at Rs4,800-4,900 and 400 bales, Khanpur at Rs4,900, 500 bales, Mailsi at Rs4,800, 600 bales, Haroonabad at Rs4,850 and 400 bales, Faqirwali also at this rate.

[Dawn report Business pages of 11-02-2010]