Trading activity improves despite ginners' strike

Mills showed fresh buying interest on the cotton market on Wednesday though the ginners strike continued against levy of withholding tax on farm commodities, including cotton, dealers said. The Karachi Cotton Association (KCA) spot rate was unchanged at Rs 9,900, they said.
Phutti prices are not available as ginners are not buying the same commodity from the growers, they said. In ready business nearly 12000 bales of cotton changed hand between Rs 9,600-10,200, they added. They said that mills accelerated purchasing to meet the near term needs and rising fears about further increase in the rates of cotton as ginners are sidelines these days and other grain markets also stopped their business. Several mills were active but some of them did buying despite the high prices on market anticipating that if ginners' strike prolonged, they would have to face shortage of commodity or they would have to pay higher prices, they said.
Market sources said that if the government withdraws the newly-introduced tax, trading activity may resume as usual. Other analysts said that despite bumper crop in India, exporters were not showing interest in the exports, instead, India is taking steps to save its textile industry. In the meantime, recently, it announced to exports cotton, they added.
Leading consumers Pakistan and China expect that India will announce more exports of cotton due to lucrative profits, they said. Bad weather in China and Pakistan forced both countries to import cotton to meet the local consumption requirements, they added. Reports coming in from the international markets, indicate that the lint prices would maintain surge due to slow supply but demand is still on surge by the consumers.
Country still needs to imports some 2.8 million bales of cotton to meet the domestic requirements, some deals are in pipeline to import cotton, they said. According to the Pakistan Cotton Ginners Association (PCGA) fortnightly report till January 15, 2011, approximately 10.76 million bales reached the ginneries against the last year's figure at 12.23 million bales.
On Tuesday the US cotton futures finished up the daily limit on light investor buying as the weak dollar and strong grains complex boosted fiber contracts as the market stayed within sight of its record highs, analysts said. The cotton market was shut on Monday to honour US Civil Rights leader Martin Luther King Jr. The key March cotton contract on ICE Futures US climbed the 4.00 cent limit to settle at $1.4544 per lb, with the session low at $1.4247. Volume traded was around 9,300 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 400 bales of cotton from Mir Pur Khas sold at Rs 9800, 400 bales of cotton from Tando Adam at Rs 9800, 200 bales of cotton from Kot Ghulam Mohad at Rs 10000, 200 bales of cotton from Hyderabad at Rs 10000, 1000 bales of cotton from Upper Sindh at Rs 10100-10200, 400 bales of cotton from Bahawal Nagar at Rs 9600, 1000 bales of cotton from Haroonabad at Rs 9600-9825, 400 bales of cotton from Chichawatni at Rs 9800-9900, 1400 bales of cotton from Bakkhar at Rs 10000, 400 bales of cotton from Shujabad at Rs 10000, 1800 bales of cotton from Rahim Yar Khan at Rs 10000, 1000 bales of cotton from Sadiqabad at Rs 10000, 400 bales of cotton from Tounsa Sharif at Rs 10000, 400 bales of cotton from Ali Pur at Rs 10000, 1000 bales of cotton from Rajan Pur at Rs 10000, 400 bales of cotton from Uch Sharif at Rs 10000, 400 bales of cotton from Mian Wali at Rs 10000, 400 bales of cotton from Shadan Lund at Rs 10000, and 1000 bales of cotton from Shah Jamal 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 18.01.2011

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37.324 Kgs       9,900       120      10,020       10,020               NIL

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Equivalent

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40 Kgs          10,610       120      10,730       10,730               NIL

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