KARACHI: The local cotton market remained stable on Wednesday. Market sources told that trading volume was low in the local market as well as in the international market.
ICE cotton futures fell for the fifth straight session on Tuesday as demand worries due to a new wave of virus infections in Europe and concerns around the US-China relations weighed on market sentiment.
Cotton contracts for May fell 0.78 cent, or 0.9%, to 83.84 cents per lb at 12:39 p.m. EDT (1639 GMT).
“The COVID outbreak, the third wave, in Europe has caused some orders to be postponed and cancelled, so that has raised some concerns regarding demand,” said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager. Also, “we have got a situation where some mills lost some confidence that prices are going to go higher,” he added.
Germany is extending its lockdown until April 18 and calling on citizens to stay at home for five days over the Easter holidays to try to break a third wave of the COVID-19 pandemic.
The United States and Chinese officials concluded on Friday what Washington called “tough and direct” talks in Alaska, which laid bare the depth of tensions between the world’s two largest economies.
The United States is the largest exporter of cotton, while China is the biggest consumer.
The dollar rose to a two-week peak against key rivals, making cotton costlier for buyers holding other currencies. On the technical front, “immediate downside pressure should be maintained while the contract remains below the 88.56/89.34” cents level, Commerzbank said in a note.
However, “we will retain our longer-term bullish stance while the price of cotton remains above the 79.39 (level),” the note added.
Total futures market volume fell by 5,120 to 12,000 lots. Data showed total open interest fell 1,350 to 229,286 contracts in the previous session.
Cotton analyst Naseem Usman told that exporters have halted yarn sales as the depreciating dollar slashed their profit margins, resulting in higher availability of the raw material at cheaper rates in the domestic market, sources from the value-added textile sector said on Tuesday.
Meanwhile, industry sources were also hopeful that the recent initiative by Pakistan for normalisation of relations with India could pave the way for cheaper cotton yarn imports from across the border.
The value-added textile sector has been demanding the government to allow import of yarn from India since prices are cheaper while the locally produced yarn is costlier. Spinners who produce yarn were of the view that the raw material was costlier due to costly cotton imports.
With the falling greenback rates, imported cotton would also be much cheaper for the industry in Pakistan.
Pakistan is importing cotton from many countries including the United States which increased the cost of production. Cotton production in the country fell by 34.4 per cent against the target while consumption continues to increase.
“The recent decline in yarn prices is neither significant nor there is any surety that prices would remain stable as it is mainly because of a sudden drop in US dollar prices,” said Aamir Aziz, an exporter of finished textile products.
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4800 to Rs 6300 per 40 kg.
The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
The Spot Rate remained unchanged at Rs 12200 per maund. The Polyester Fiber was available at Rs 220 per Kg.
Copyright Business Recorder, 2021
Comments
Comments are closed.