Early phutti arrival, as was expected, has started, resulting in prices showing modest fall in process of trading, dealers said on the cotton market on Wednesday. The Karachi Cotton Association (KCA) official spot rate was retained at the overnight level at Rs 8,500, they said.
In Sindh prices of new phutti were quoted at Rs 3500-3550 and the rates of old crop phutti in Sindh and Punjab, were of low type at Rs 2500 and that of superior type at Rs 3000, they said. In ready business, nearly 2,600 bales changed hands between Rs 7650-8700, they added. Market sources were of the view that prices may fall or retain the present levels due to new phutti arrivals. It is expected that the production is likely to improve significantly. Some analysts observed that new phutti arrivals have started reaching the ginneries as was expected.
They also said that soaring cotton prices in the international market propelled the growers to increase cotton production to meet the local demand to achieve the textile exports target as well. Presently, the prices are stable in the local market after touching the new high at Rs 14000 and the NY cotton futures turned volatile after hitting the 2.29 cent per lb.
On Tuesday the US cotton futures settled the daily limit down as follow-through liquidation and switch trade deflated the market for the second consecutive session, analysts said. Some in the trade wondered if fears the US Agriculture Department's monthly supply/demand report on Thursday may show a reduction in US cotton exports, which could have pressured fibre contracts as well, they said.
The benchmark December cotton futures on ICE Futures US fell the seven cent limit to end at $1.2993 per lb, with the day's top at $1.3728. It is the biggest one-day move for cotton since March 8. Last Thursday, the December contract finished at $1.3923 per lb, the highest settlement for the third position cotton contract since May 3. In the span of less than a week's trade, the market has lost 6.7 percent in value. Spot July cotton also dropped the seven cents daily limit to end at $1.4863 per lb.
Open interest in the cotton market was at 159,809 lots as of June 6, still within striking distance of the 161,193 lots in open interest on June 3, its highest level since April 20, the exchange data showed. Total volume traded on Tuesday reached almost 25,100 lots, over 50 percent above the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 1000 bales of cotton (mill to mill) at Rs 8700, 200 bales (mill to mill) at Rs 8700, 200 bales from Sanghar at Rs 7650, 1600 bales from Khan Pur at Rs 8700, 200 bales from Sadiqabad at Rs 8700, 800 bales of cotton from Rahim Yar Khan at Rs 8700, 200 bales of cotton from Mongi Bangla sold at Rs 8000 and 200 bales from Fort Abbas at Rs 8575.
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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 07.06.2011
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37.324 Kgs 8,500 120 8,620 8,620 NIL
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Equivalent
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40 Kgs 9,109 120 9,229 9,229 NIL
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