Seedcotton prices drift lower on cotton market

Prices of seedcotton fell on the cotton market on Tuesday in process of slow business, dealers said. The Karachi Cotton Association (KCA) official spot rate was left unchanged at Rs 8,650, they said. In Sindh prices of new Phutti came down sharply, shedding Rs 200 to Rs 3750-3800 and in Punjab rates were at Rs 3800-3900, they said.
In ready business trading came down as a result of rise in the asking prices by the ginners, nearly 1400 bales of cotton changed hands at Rs 8500-8900, they added. Some experts said that psychical activity was subdued in the absence of mills' demand as most of them were keen to begin the deal in the starting week of the new fiscal year 2011-12.
They said that the mills were planning to do business in the next week, because by then their overdraft limits will be effective. The other factor was ginners' inflexible attitudes towards prices, they are not lowering the rates of cotton prices as China has cut the import duty, which is giving an impression that demand will rise and prices will go up automatically, they said.
On Monday the US cotton futures ended mixed, with the key December contract eking out a gain after hitting its five-cent daily downside limit, as buyers moved in after enduring an earlier rout stemming from weaker overseas markets. The key December cotton contract on ICE Futures US ended up 0.07 cent at $1.2199 per lb, recovering from its five-cent downside limit at $1.1692. The session peak was at $1.2358.
Total market volumes traded stood at almost 15,000 lots, about a third below the 30-day norm, Thomson Reuters preliminary data showed. Losses in China's cotton futures were partly to blame for the weaker ICE futures open, analysts said. Zhengzhou Commodity Exchange January cotton futures fell five percent to a low of 22,200 yuan per tonne, the lowest since October, after Beijing announced a cut in import tariffs on some cotton products such as cotton cloth to six percent from 12 percent, effective July 1.
Mike Stevens, an independent cotton analyst in Mandeville, Louisiana, said December buy stops orders were triggered above Friday's session peak at $1.2274, the nine-day moving average at $1.2265, and Thursday's session high at $1.2302. The spot July cotton contract shed 3.22 cents or about two percent to end at $1.62 per lb. The following deals were reported: 600 bales of cotton from Yasman Mandi at Rs 8500, 200 bales from Burewala at Rs 8900, same figure from same station at Rs 8800, same number from Haroonabad at Rs 8850 and equal number from Haroonabad at Rs 8800.

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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 27.06.2011

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37.324 Kgs       8,650       120       8,770        8,770               NIL

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Equivalent

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40 Kgs           9,270       120       9,390        9,390               NIL

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