Panic selling seen by ginners on fears of decline in cotton rates

Despite the panic selling by ginners prices resisted further decline on the cotton market on Friday in process of trading, dealers said. The Karachi Cotton Association (KCA) official spot rate was inert at Rs 6,100, they said. Prices of seedcotton in Sindh were almost unchanged at Rs 2200-2600 and rates in Punjab were at Rs 2400-2700, they said.
In ready dealings over 22,000 bales of cotton changed hands between Rs 4500-6,200, they added. According to the market sources, phutti arrival was good and may improve in the coming days. It is likely that prices may come down further due to the said reason, they added.
Commenting on the easier trend in the rates, Naseem Usman said that the world over prices are on downward trend due to falling demand by the importing countries. He said that in Pakistan, production is better and if variety of cotton of Extra Long Staple (ELS) improves, the country may not so much depend on the import of best quality to improve the textile products.
In the meantime, fall in textile exports may propel exporters to improve products to compete in the challenging world, which is under pressure due to recession, other analysts said. Besides, according to the market sources, cotton consumption in China, the world's top consumer of the fiber, is seen falling over five percent in 2011/12 to 9.4 million tonnes, industry publication Cotlook said.
Cotlook said the use of cotton by China "has undergone a further downward adjustment, principally as a result of a decrease in projected mill use of raw cotton in China, where a modest net decline in consumption is now foreseen." In its September report, Cotlook had estimated China's cotton consumption at 9.9 million tonnes.
On Thursday the NY cotton futures settled at a 140-month low on investor liquidation as nagging worries about the euro zone debt crisis and weak fiber demand pushed the market below a key support level, analysts said. The December cotton contract on ICE Futures US dropped 2.86 cents or by almost 3 percent to end at 96.86 cents per lb, trading from 96.78 cents to $1.0004. It was the first time in almost four weeks that the market broke a trading band that had confined December in a range from 98 cents to $1.04.
It is the lowest settlement for the spot cotton contract since September 2010, according to Thomson Reuters data. Total volume traded on Thursday hit over 19,600 lots, more than 40 percent above the 30-day norm, preliminary Thomson Reuters data showed.
The following deals were reported: 800 Balses of cotton from Tando Adam sold at Rs 5500, 400 bales of cotton from Khipro at Rs 4500, 2000 bales of cotton from Khair Pur at Rs 5500-6000, 2000 bales from Upper Sindh at Rs 5800-6000, 400 bales from Bahawalpur at Rs 5900, 1000 bales of cotton from Bahawal Nagar at 5900-6000, 1600 bales of cotton from Burewala at Rs 5700/6050, 200 bales from Chistian at Rs 5700, 1000 bales from Haroonabad at Rs 5750-5800, 400 bales from Hasil Pur at Rs 5775, 1000 bales from Bahawal Pur at Rs 5800-5900, 400 bales from Jalal Pur at Rs 5900, 200 bales from Pir Mahal at Rs 5900, 600 bales from Shujabad at Rs 5900/5975, 400 bales from Pul Bagarh at Rs 5900, 400 bales from Chani Goth at Rs 5900/6000, 200 bales from Yazman Mandi at Rs 5900, 200 bales from Lodhran at Rs 5900, 400 bales from Multan at Rs 5900, 400 bales from Ahmed Pur at Rs 5900, 200 bales from Kaichiwala at Rs 5900, 200 bales from Faqeerwali at Rs 5940, 200 bales from Karoor Pacca at Rs 5950, 200 bales from Uch Sharif at Rs 6000, 200 bales from Tonsa Sharif at Rs 6000, 1000 bales from Shadan Lund at Rs 6000/6100, 200 bales from Gajjo Mandi at Rs 6000, 2000 bales from Khanewal at Rs 6000, 2000 bales from Mian Wali at Rs 6000/6200, 2800 bales from Rahim Yar Khan at Rs 6000, 400 bales from Sadiqabad at Rs 6000/6050, 1000 bales from Kabir Wala at Rs 6100, 1000 bales from Fazil Pur at Rs 6100.