Spot rate was sharply higher on the cotton market on Friday following the continued rise in the ready business due to short crop, dealers said. In response to surge in the ready prices, the Karachi Cotton Association (KCA) raised the spot rate by Rs 500 to Rs 11500, they said. Phutti prices in Sindh and Punjab were unchanged at Rs 4300-5500, they said.
In the ready business trading activity improved as about 8,000 bales of cotton changed hands between Rs 10600-12500, they said. Some brokers said that the prices were higher due to mills' demand but it looks rates may not maintain the present trend and come down following the downward trend in the international market.
The local market was also in grip of speculative trade ahead of long weekend due to Kashmir Day. In the meantime, if the ginners, who were still hoping for better income, try to sell their old stock, prices may fall slightly in the coming days, they added.
According to a report the main US cotton exchange acted on Thursday to curb speculation in an overheated cotton market that has seen prices soar to heights unseen since the US Civil War. Hoping to prevent a repeat of 2008, when a sharp rally followed by a steep plunge roiled the industry, ICE Futures US approved a rule change. The new rule would require investors with more than 300 lots in the spot contract to prove they are adequately hedged going into delivery.
Separately, the US Commodities and Futures Trading Commission, the country's commodities regulator, said it has approved an expansion of the daily trading limits in the cotton market. Both developments deflated the market, analysts said. On Thursday the US cotton futures closed sharply lower in volatile trading, as profit taking pulled the market off its latest record high on a day when the ICE Futures US exchange moved to curb speculation. Cotton futures closed with the biggest one-day decline since early December, Thomson Reuters data showed. The market had surged almost 30 percent since the middle of January to the highest level in almost 150 years.
The key March cotton contract on ICE Futures US slid 4.36 cents to close at $1.7186 per lb. The price swung wildly from $1.8122, up the Five cent limit, to $1.7122, down the five cent limit. Total volume hit 50,500 lots, the most in 2-1/2 months and more than 150 percent above the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 400 bales of cotton from Tando Adam sold at Rs 11000, 400 bales of cotton from Sanghar at Rs 11000, 400 bales from Shahdad Pur at Rs 11500, 400 bales of cotton from Ghotki (CR) 12500, 600 bales of cotton from Upper Sindh at Rs 12200, 1000 bales of cotton from Bahawal Nagar at Rs 10600/10750, 400 bales of cotton from Pir Mahal at Rs 10800, 400 bales of cotton from Haroonabad at Rs 11000, 400 bales of cotton from Jahania at Rs 11200, 600 bales of cotton from Ahmed Pur at Rs 11200/11600, 400 bales of cotton from Head Bekani at Rs 11500, 1200 bales of cotton from Rahim yar Khan at Rs 11500/12000 and 500 bales of cotton from Rahim Yar Khan(CR) at Rs 12500.
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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 03.02.2011
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37.324 Kgs 11,500 120 11,620 11,120 +500
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Equivalent
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40 Kgs 12,325 120 12,445 11,909 +536
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