Listless business was again witnessed on the cotton market on Tuesday as mills remained on the sideline due to traders' strike, dealers said. Karachi Cotton Association (KCA) official spot rate was steady at Rs 12,500, they said. In Sindh and Punjab phutti price of low type was at Rs 4000 and superior type also unchanged at Rs 5000, they said.
In ready business, not a single deal finalised, they added. Market sources said that mills and spinners were conspicuous by their absence due to lack of buying interest. Commenting on the lacklustre trade during the last several sessions, some brokers said that confusions over presidential ordinance issued for the mobilisation of additional revenue by imposing special federal excise duty and sales tax also kept traders away from the normal business.
They also attributed the lacklustre condition to anticipations by the mills to fall in prices in sympathy with the decline in international market. As since the week started the rates are going down in the New York cotton market as NY cotton contracts, where prices moved below two dollars per lb, so cotton traders preferred to be sidelined.
In the meantime, the new sowing season has started and it is estimated that the country is likely to harvest around 15 million bales of cotton next season, they said. On the other hand, falling unsold stock is not allowing the ginners to bring the prices below the psychological level, they said.
Besides, last week India's decision to remove registration condition on cotton yarn exports helped ease pressure on the local market where prices of yarn and cotton started to move lower, they said. It looks that mills are delaying their forward buying mainly because of getting benefits from falling cotton prices in the near future, they said.
On Monday the US cotton futures closed flat as investors awaited a supply/demand report from the US Department of Agriculture, but new-crop contracts rose three percent on buying related to spreads. The key May cotton contract on ICE Futures US ended unchanged at $1.9555 per lb, dealing from $1.9221 to $1.9649. Last week, cotton fell 4.4 percent.
About 60 to 70 percent of the day's volume was related to spread trading between May and December as well as between July and December, Stevens said. Volume traded in the cotton market totalled around 17,000 lots, about one-third under the 30-day norm and sharply below Friday's level, Thomson Reuters preliminary data showed. Volume traded on Friday reached 27,789 lots, ICE Futures US data showed.
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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 04.04.2011
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37.324 Kgs 12,500 120 12,620 12,620 NIL
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Equivalent
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40 Kgs 13,396 120 13,516 13,516 NIL
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