Official spot rate was steely down on the local cotton market on Friday in process of thin trading as a result of falling interest by the mills, dealers said. The Karachi Cotton Association (KCA) spot rate was brought down by Rs 400 in a single day slide to Rs 9000 ahead of long weekend, they said.
Seed cotton prices in Sindh and Punjab were unchanged at Rs 3,900-4,200, they said. In ready business came down as over 7,000 bales of cotton changed hand between Rs 9000-9500, they added. According to some analysts drastic fall in the spot rate and slow trading activity were seen on the local market owing to extended fall in NY cotton futures on lack of buying interest. Business may keep slow pace following the holidays on account of the New Year, Christmas and birth anniversary of Quaid-e-Azam, they added.
They said that mills curtailed their daily intake owing to persistent gain in the world prices during the expectations that the prices will come down in the NY cotton market. Current dealings were based on quality factor, totally. Some of the mills were probing the other markets for the cheaper stuff, they said.
They also said that decline in rate was not unexpected because after the speculative rise in the world cotton market. In the meantime, despite the falling trend in both the local and foreign markets, some brokers were of the view that further rise in the global market could not be ruled out as supplies are too short to meet the industry's demand. During the last sessions the ruling March was quoted at 30-year high of 159.12 cents per lb.
Commenting on the surge in the world cotton prices some days ago, other analysts said that both the short supply and speculative increase in the rates caused crisis like conditions in world textile industry and major consumer countries. As they feared to be wiped out from the textile export front.
Local textile industry is also passing through one of the major supply crisis in its history, having a negative fall out on its capacity to be leading forex earners for the country, they said. They said that despite the rise in textile exports during five months of the current fiscal year, the foreign exchange reserves fell to 16.39 billion dollars from 16.41 during the last week, they added.
On Thursday the US cotton futures ended the daily limit down in technical selling, as players took cash off the table in the best performing commodity of 2010 in time for the Christmas holidays, analysts said. The market will be closed on Friday and reopen on Monday at 7:30 am EST (1230 GMT). The key March cotton contract on ICE Futures US fell the 6.00 cents limit for the second straight day, to finish at $1.4812 per lb. Volume was modest as it stood at about three quarters of the 30-day norm of 29,200 lots, Thomson Reuters preliminary data showed.
The following deals were reported: 1000 bales of cotton from Upper Sindh sold at Rs 9300, 400 bales from Khanpur at Rs 9500 (conditional), 1200 bales of cotton from Rahim Yar Khan (conditional)at the same rate, 1400 from the same station at Rs 9200, 1200 bales from Bekkhar at Rs 9100, 400 bales from Iqbal Nagar at Rs 9000, 400 bales of cotton from Chichawatni, same figure from Dunyapur, 800 bales from Rajanpur, and 200 bales of cotton from Bahawal Nagar all finalised at Rs 9000.
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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 23.12.2010
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37.324 Kgs 9,000 120 9,120 9,520 -400
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Equivalent
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40 Kgs 9,645 120 9,765 10,194 -429
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