Strong activity on cotton market

Handsome business activity was witnessed on the cotton market on Tuesday as expectations for increased foreign demand and falling rates pushed the buyers back to the market, dealers said. The Karachi Cotton Association (KCA) official spot rate was reduced by Rs 100 to Rs 6,700, they said.
Seedcotton rates in Sindh were lower by Rs 200-300 to Rs 2700-2800, prices in Punjab followed the same pattern, falling by Rs 100-200 to Rs 2500-2800, they said. In the ready business approximately, 7000 bales of cotton changed hands between 6500-7000, dealers added.
Some experts said that during the last several sessions, prices showed stability but now, the rates fell and it looks tracking the NY cotton futures, which dropped sharply due to low demand. Downward trend in the prices forced most of the mills to keep on the sidelines to observe the fresh development in the market, Naseem Usman said. Highlighting the present condition in the market, some experts said that if selling of cotton yarn starts, the mills will be able to finalise deals in a big way and if the foreign demand rises, this factor will be a great support for the cotton traders.
Cotton production is good but demand is picking up as traders were expecting, since the new crop have started arriving in the market, prices were on decline, they said adding that heap of unsold cotton yarn is causing big problem for the sellers as local traders were not placing large orders. Despite all these pathetic conditions it is expected that the textile exports would jump to a record 20 billion dollars during the current fiscal year on the back of bumper cotton harvest, but there are a lot of slips between cup and lips, they said.
According to a report, India, the world's second biggest exporter of cotton, could turn into an importer within three or four years as production peaks out because of falling yields, forcing the country's textile mills to compete for supplies with top importer China. Despite rising acreage, India's cotton yields are down to about 475 kg per hectare, or 38 percent below the global average, as plants need to be spaced widely for hand picking, in contrast to other leading growers, such as the United States and Australia, which use machines.
On Monday the NY cotton futures ended down and near a nine-month low on investor liquidation on a stronger dollar and jitters over the effects the euro zone debt crisis will have on economic growth and fibre demand, brokers said. The key December cotton futures on ICE Futures US fell its five-cent daily limit to end at $1.0888 per lb, with the session top at $1.138. It was the lowest close for the second position cotton contract since mid-October 2010, Thomson Reuters data showed.
Volume traded stood almost 9,000 lots at 2:44 pm EDT (1844 GMT), over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. On Tuesday, in the early hours, the US cotton futures slid more than 4 percent to their lowest since October, while China's cotton prices lost nearly 6 percent on fears the euro zone debt crisis could spread to Italy and weak global demand for the fiber. The market's attention is turned towards the US Department of Agriculture report due at 1230 GMT, which analysts say is expected to include an upward revision to cotton inventory estimates.
The following deals were reported: 1600 bales of cotton from Shahdad Pur sold at Rs 6500-6900, 800 bales of cotton from Sanghar at Rs 6800, 200 bales from Tando Mohammad Khan at Rs 6850, 800 bales from Hyderabad at Rs 6800-6900, 200 bales from Mir Pur Khas at Rs 6750, 800 bales from Burewala at Rs 6700-6900, 400 bales from Haroonabad at Rs 6900, 400 bales from Chichawatni at Rs 6900, 200 bales from Pak Pattan at Rs 6800, 200 bales from Hasil Pur at Rs 7000, 200 bales from Kabbir wala at Rs 7000 and 200 bales from Khanewal at Rs 7000.

===========================================================================

The KCA Official Spot Rate for Local Dealings in Pak Rupees

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

                                    MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL

===========================================================================

Rate              Ex-Gin   Upcountry   Spot Rate    Spot Rate    Difference

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

                                                  on 11.07.2011

===========================================================================

37.324 Kgs       6,700       120       6,820        6,920              -100

---------------------------------------------------------------------------

Equivalent

---------------------------------------------------------------------------

40 Kgs           7,180       120       7,300        7,408              -108

===========================================================================