Downward trend persists on cotton market on easy supply, decline in New York futures

Hovering fears about the easy supply of seedcotton kept the rates under pressure on the cotton market on Thursday as spot rate was curtailed for the second day in a row, dealers said. The Karachi Cotton Association (KCA) official spot rate shed further Rs 100 to Rs 5,100, they said.
Prices of seedcotton in Sdindh were unchanged at Rs 1500-2200 and in the Punjab prices followed the same pattern, showing no big change at Rs 1600-2300, they said. In ready dealings approximately 23,000 bales of cotton changed hands at Rs 4,100-5,150, they added. Falling was seen on the cotton market as strong supply position and in the absence of fresh demand from any quarter, pushed the prices down, some brokers said.
In the meantime, mills and spinners continued buying to run the routine business, they said, adding that downward trend in the NY cotton future is making growers and ginners jittery because they feared that buyers may shift their position from local cotton to the NY cotton due to cheaper rates.
These days the US cotton is not showing any recovery owing to the less buying interest they added. In the ready business, the prices are falling but with gradual pace, so, this factor is causing jitters among the growers, they said.
Reuters adds: On Wednesday the NY cotton futures finished at a 16-month low as weak outside markets coupled with poor fundamentals took their toll, and further losses could occur in coming days, analysts said. The benchmark March cotton futures fell 2.19 cents or by 2.5 percent to finish at 85.12 cents per lb, trading from 84.35 to 87.42 cents. On the spot continuation charts, it was the lowest level traded since the middle of August 2010.
Cotton prices began rallying in August 2010 due to tight supplies and robust demand, eventually hoisting cotton futures to their highest since the US Civil War in the 19th century. Prices peaked at $2.27 in March before starting a sharp decline. Volume traded on Wednesday reached almost 13,100 lots, nearly 40 percent under the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 400 bales of cotton from Jhole sold at Rs 4200, 1000 bales of cotton from Khair Pur at Rs 4300/4400, 2000 bales of cotton from Upper Sindh at Rs 4850/5000, 800 bales of cotton from Hasil Pur at Rs 4700/4800, 2000 bales of cotton from Fort Abbas at Rs 4700/4800, 800 bales of cotton from Burewala at Rs 4750, 800 bales of cotton from Faqir Wali at Rs 4700/4800, 2000 bales of cotton from Haroonabad at Rs 4700/4800, 400 bales of cotton from Kaichi Wala at Rs 4800, 600 bales of cotton from Donga Bonga at Rs 4800, 1000 bales of cotton from Yazman Mandi at Rs 4800, 400 bales of cotton from Tandlian at Rs 4850, 800 bales of cotton from Layyah at Rs 4900, 1000 bales of cotton from Bahawal Pur at Rs 4900, 200 bales of cotton from Kehror Pakka at Rs 4900, 2000 bales of cotton from Khanewal at Rs 4900/5000, 400 bales of cotton from Khan Pur at Rs 4900, 1000 bales of cotton from Sadiqabad at Rs 4950, 400 bales of cotton from Lodhran at Rs 5000, 1000 bales of cotton from Rajan Pur at Rs 5000/5100, 1000 bales of cotton from Jalal Pur at Rs 5000, 1000 bales of cotton from Shujabad at Rs 5000, 400 bales of cotton from Head Bekani at Rs 5000, 1000 bales of cotton from Ghazi Ghat at Rs 5100, 400 bales of cotton from Mian Wali at Rs 5100, 400 bales of cotton from Shadan Lund at Rs 5150.

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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 14.12.2011

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37.324 Kgs         5,100      130        5,230         5,330           -100

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Equivalent

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40 Kgs             5,466      130        5,596         5,703           -107

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