Spot rates gained Rs 50 on the cotton market on Tuesday following the imposition of ban on Indian export, dealers said. The official spot rate was raised by Rs 50 to Rs 5,350, they said. Seedcotton prices in Sindh were at Rs 1900-2300 and in the Punjab at Rs 2000-2650, they said.
In ready dealings, trading activity improved as around 6000 bales of cotton changed hands at Rs 3800-5600, they added. Market sources said that prices showed slight gains in the local market after the Indian move. In India, cotton traders were not happy with the government's decision, they added. But, on the other hand,this factor caused revival of activity as there was dullness in the absences of market moving news, they said.
India's farm minister called on Tuesday for the lifting of a "highly objectionable" ban on cotton exports, less than 24 hours after it was announced and sparked a sharp rally on global cotton markets. But after the demand, global prices eased, however, after Farm Minister Sharad Pawar's comments, with the benchmark May US futures contract maintaining gains of just over one percent. According to reports, the global cotton prices are likely to remain under pressure even after India banned the cotton exports, a senior Australian farm official said on Tuesday, as more production comes on stream from other producing countries.The US cotton supplies was slim, despite this factor, after the Indian ban news, China may look to the US but, weak economy may cut cotton imports, they said.
Reports showing that China's top cotton growing area, the north-west region of Xinjiang, is likely to see a nine percent fall in cotton planting in 2012, a former senior official at a major local grower said, in line with estimates for a drop the country's overall acreage.
On Monday, the NY cotton futures, which only last year hit a historic peak above $2 a lb, rallied to close limit up, spurred by India's surprise ban on exports of its cotton. That stoked speculative fervour that Chinese mills may have to turn to thinning US cotton supplies, evoking memories of the rally which saw cotton prices treble in August 2010 and eventually climax at $2.27 in March 2011.
The benchmark May cotton contract on ICE Futures US exchange soared its four-cent daily limit to close at 92.23 cents per lb, a rise of 4.5 percent and posting its biggest one day move in a month, Thomson Reuters data showed. Monday's volume of nearly 24,000 lots was about one percent under the 30-day average, according to the data.
India banned cotton exports with immediate effect to ensure ample supplies for the domestic textile industry, which accounts for four percent of GDP in a South Asian nation with a population of over one billion people where preserving jobs is deemed vital to stability.
The following deals were reported: 400 bales of cotton from Shahdadpur sold at Rs 3800, 600 bales from Sanghar at Rs 4200, 400 bales from Kazi Ahmed at Rs 4800, 200 bales from Uch Sharif at Rs 5100, 400 bales from Bahawal Pur at the same rate, 2100 bales from Fort Abbas at Rs 5250, 600 bales from Mian Wali at Rs 5600, same figure from Khan Pur and 400 bales from Rahim Yar Khan all done at Rs 5600.
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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 05.03.2012
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37.324 Kgs 5,350 130 5,480 5,430 +50
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Equivalent
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40 Kgs 5,734 130 5,864 5,810 +54
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