KCA raises spot rate by Rs 300 to Rs 12,500 in nominal trade on cotton market

Official spot rate was enhanced on the cotton market on Tuesday in process of slow trading, dealers said. Karachi Cotton Association (KCA) official spot rate, after maintaining a firm trend, was raised by Rs 300 to Rs 12,500, they said. In Sindh and Punjab phutti price of low type was at Rs 4000 and that of superior type also unchanged at Rs 5000, they said.
In ready business, 800 bales of cotton changed hands between Rs 12500-13000, they added. Trading activity could not pick up as a result of higher prices due to short crop, dealers said. Mills were sidelined during the last sessions in expectations of decline in the rates, but, instead of fall, prices have started going up, they said. They said that during the last several sessions, mills and spinners were inactive due to some confusions relating to the tax, zero-rating. Now, the issues are started setting down and other major problems will be solved in the coming days, they hoped.
On Tuesday the government and industry officials said they are hoping for record cotton production of over 15 million bales in the 2011/12 crop year as farmers sow a wider area after domestic prices more than doubled from a year ago. Besides, the Federal Board of Revenue (FBR) is likely to announce an amnesty scheme for the textile units to be registered with the sales tax department after issuance of the amended Zero-rating notification in the next few days.
Additionally, it is expected that programme to be launched to grow 21 million bales of cotton by 2015 from next fiscal year. According to a report, the survey of farmers, brokers and analysts showed they expect US 2011 cotton plantings to reach between 13.21 to 13.24 million acres, up almost 20 percent from last year and the highest cotton plantings since 15.27 million acres were planted in 2006.
On Monday the US cotton futures closed the daily limit down due to light investor sales as players began positioning themselves before release of a key government plantings report this week, analysts said. The key May cotton contract on ICE Futures US dropped the seven-cents limit to end at $1.9749 per lb, with the session top at $2.04. Total volume was around 15,000 lots, almost 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: some 400 bales of cotton from Lodhran sold at Rs 12500, 200 bales from Sadiqabad sold at Rs 12800 and 200 bales from Khanpur at Rs 13000, they said.

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The KCA Official Spot Rate for Local Dealings in Pak Rupees

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FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"

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                                    MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL

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Rate              Ex-Gin   Upcountry   Spot Rate    Spot Rate    Difference

                    For      Price     Ex-Karachi  Ex. KHI. As   Ex-Karachi

                                                  on 28.03.2011

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37.324 Kgs      12,500       120      12,620       12,320              +300

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Equivalent

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40 Kgs          13,396       120      13,516       13,195              +321

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