Recovery in New York cotton market lends support to local prices to resist fall

Sharp recovery in the NY cotton futures, aided the prices to resist fall on the cotton market on Saturday, dealers said. Karachi Cotton Association (KCA) official spot rate firmly held the overnight level at Rs 9,500 after steep gain in the NY cotton market, they said.
In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000, they said. In ready business nearly 2000 bales of cotton changed hands between Rs 7,500-9000, they added. According to the market sources, during the week, prices were on downward revision, but last trading session of month of April, rates stabilised following the NY cotton market track.
Furthermore, increase in the NY prices, encouraged the ginners as they were not interested in bringing down the prices of fine quality, still hoping for handsome recovery in the present prices to gain profit, experts said. On Friday, the US cotton futures rallied to daily limit, chalking up steep gains for the last day in April, along with most other commodities, as many investors rotated into hard assets believing the US Federal Reserve would keep money cheap for awhile. Most-active July cotton on ICE Futures US closed with 6.0 cent gains, the upside daily limit, at $1.5802, a 3.95 percent increase. New-crop December cotton rallied 4.35 cents, or 3.44 percent, to $1.3093 cents a lb. by settlement.
May cotton gained 5.96 cents, a 3.45 percent rise, to end at $1.7878 per lb. Analysts were puzzled by the sharp gains in May, which expires on May 6 and is in the middle of deliveries. Only 167 delivery notices have been issued to date. Yet, open interest in the May contract still seemed high, with 5,229 lots at the start on Friday, for a contract that has been in delivery period all week. Open interest declined only minimally from 5,350 lots at the end on Wednesday.
For the benchmark July contract, the session began with follow-through panic selling, but brokers noted that the selling eventually ran out of steam. "It took very little volume to establish a 1,000 point range to get July back to the upside," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
The following deals were reported: 100 bales of cotton from Sultanabad sold at Rs 7500, 400 bales of cotton from Tonsa Sharif at Rs 7850, 400 bales from Gharmaraja at Rs 8000, 200 bales from Karor Pacca at Rs 8000, 200 bales from Qaboola at Rs 8800 on credit and 800 bales from Rahim Yar Khan at Rs 8000 purchased by exporters.

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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 29.04.2011

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37.324 Kgs         9,500      120         9,620        9,620            NIL

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Equivalent

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40 Kgs            10,181      120        10,301       10,301            NIL

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