Spot rate raised to Rs 9,900; lint prices remain range bound on cotton market

Firmness prevailed on the cotton market on Thursday, the mills were on the sidelines as ginners were not ready to oblige them, dealers said. The Karachi Cotton Association (KCA) spot rate was raised by Rs 100 to Rs 9,900, they said. Seed cotton prices in Sindh and Punjab were at Rs 3,900-4,700, they said.
In ready business, over, 9,000 bales of cotton changed hand between Rs 9,700-10,200, they added. Market sources said that mills did not take interest in fresh buying mainly because of bullish trend in the prices. Commenting on the thin business, they said that the government has imposed withholding tax instead of General Sales Tax (GST) on the agriculture sector, which was passed in 1995 and now imposed.
Both mills and spinners adopted wait-and-see attitude to see fresh development after the imposition of withholding tax, they said. The ginners did not lower the asking prices following the anticipations that prices will go up in the coming days, they said.
According to a report, India has announced that new procedures for allocating the un shipped portion (an estimated 1.7 million bales) of its 4.3 million-bale export quota for the 2010/2011 local marketing year. Exporters have until January 6 to submit their applications for export authorisation and will have 30 days to ship their cotton from the date of issuance of a permit, but no exports will be allowed after February 25, 2011. The estimate of 2010/2011 cotton production remains unchanged at 26 million bales.
On Wednesday the US cotton futures closed higher on investor buying, boosted by a strong grains complex, a weak dollar and a rally in equities after a strong debt sale by Portugal, analysts said. The key March cotton contract on ICE Futures US rose 0.72 cent to settle at $1.4797 per lb, having briefly hit the five-cent trading limit at $1.5225. The session low was at $1.477. Volume traded was around 29,000 lots, more than 60 percent above the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 400 bales of cotton from Nawabshah at Rs 9800, 400 bales from Khair Pur at Rs 10000, 400 bales from Uper Shindh at Rs 10200, 600 bales from Bahawal Nagar at Rs 9700, 400 bales from Haroonabad at Rs 9700, 400 bales from Muridwala at Rs 9750, 1200 bales from Hasil Pur at Rs 9800-10000, 1600 bales of cotton from Chicawatni at Rs 10000, 400 bales from Liaquat Pur at Rs 10000, 400 bales from Khan Pur at Rs 10000, 400 bales from Rahim Yar Khan at Rs 10200, 1000 bales from Jalal Pur at Rs 10000, 1400 bales from Main Wali at Rs 10200 and 400 bales from Rajan Pur at Rs 10200.

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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 12.01.2011

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37.324 Kgs        9,900       120       10,020         9,920           +100

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Equivalent

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40 Kgs           10,610       120       10,730        10,623           +107

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