Prices resist further decline as buying improves on cotton market

Hectic trading activity was seen on the cotton market on Saturday as mills and spinners made purchasing on expectations of improvement in the rates in the coming days, dealers said The Karachi Cotton Association (KCA) official spot rate stayed put at Rs 5,500, they said.
Seedcotton rates in Sindh and the Punjab were down by Rs 200-300 to Rs 2200-2400, they said. In the ready business, brisk activity was seen as above 10,000 bales of cotton changed hands between Rs 5300-5,500, dealers said. Some analysts said that hope for the best but prepare for the worst like situation prevailed in the textile sector because exporters of lint or cotton yarn are conspicuous by their absence. The buyers are not looking interested in the fresh purchasing as chief buyer (China) is on the sidelines due to weak economic scenario, they added.
The cotton growers, who have invested high cost on the harvesting of crop, now facing financial problem because of no sale of the stuff, they said. Besides, the chief executive of the world's biggest cotton merchant said that Indian cotton exports will dictate fibre prices in the 2011/12 season (August/July), demand for cotton, which tumbled sharply after the market's record rally to over $2/lb this spring, and. Joe Nicosia, president and chief executive of Allenberg Cotton Co, told the Ag Market conference of cotton industry analysts there had been a "large shift" into polyester in Asia, the leading consumer of cotton.
"How much of the demand has been deferred and how much has been lost will determine the 2011/12 (cotton) pricing," Nicosia told the conference at the ICE Futures US offices in New York. The US Agriculture Department's monthly supply/demand report in July forecast world cotton consumption in 2011/12 at 116.75 million (480-lb) bales, 2.2 million bales down from its June estimate.
On Friday cotton futures ended slightly higher on investor buying in light trade as players appeared to be marking time ahead of Monday's USDA crop progress report, analysts said. Benchmark December on ICE Futures US inched up 0.01 cent to close at 98.64 cents per lb, trading from 96.65 cents to $1.0018 which was virtually unchanged from Thursday's 96.75 cents to $1.015 trading band. For the week, cotton lost 0.82 percent.
The contract finished at 96.46 cents last Monday which marked the lowest close for the second-position contract since early October 2010, according to Thomson Reuters data. On Monday, the market will look toward the USDA's weekly crop progress report to gauge the condition of the US cotton crop. It will be released at 4 pm EDT (2000 GMT).
The following deals were reported: 600 bales of cotton from Hyderabad sold at Rs 5400-5450, 1000 bales of cotton from Shahdad Pur at Rs 5400-5500, 400 bales from Matiyari at Rs 5400, 600 bales from Sanghar at Rs 5400, 200 bales from Mir Pur Khas at Rs 5400-5500, 200 bales from Mir Pur Batero at Rs 5400, 400 bales from Sarhari at Rs 5400, 800 bales from Khanewal at Rs 5400-5500, 400 bales from Arif Wala at Rs 5300-5500, 600 bales from Chichawatni at Rs 5300-5500, 400 bales from Mian Channun at Rs 5300-5400, 600 bales from Bahawal Nagar at Rs 5400, 1000 bales from Pak Pattan at Rs 5300-5400, 1000 bales from Haroonabad at Rs 5350-5400, 800 bales from Burewala at Rs 5500, 200 bales from Vehari at Rs 5400, 200 bales from Mongi Bangla at Rs 5400, 200 bales of cotton from Lodhran at Rs 5400 and 200 bales from Gojra at Rs 5400.

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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 22.07.2011

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37.324 Kgs       5,500       120       5,620        5,620               NIL

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Equivalent

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40 Kgs           5,894       120       6,014        6,014               NIL

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