KARACHI: Under the influence of international market local market remained bearish on Thursday. Market sources said that trading volume remained low because of fluctuation in the price of dollar as compared to international market where dollar is strengthening.
Sources told that reason behind bearish trend worldwide is increasing tension between China and America on economic front.
ICE cotton futures fell on Wednesday to the lowest in more than a month on a stronger dollar and expectations that rainfall in Texas would be beneficial for the natural fibre crop.
Cotton contracts for May fell 1.16 cent, or 1.4%, to 82.37 cents per lb at 12:42 p.m. EDT (1642 GMT). The contract fell to 81.91 cents earlier, its lowest since Feb. 4.
“West Texas is still in drought but in the last week or so there has been some rains, some snow and it’s (also) snowing and raining right now in north Texas so, that is somewhat beneficial (to the crop),” said Rogers Varner, president of Varner Brokerage in Cleveland.
The US dollar rose to a four-month high against key rivals, making cotton costlier for other currency holding investors.
“Demand has been very good. We might see some deterioration in tomorrow’s report, but it has been very steady and good,” Varner said. Market participants are currently awaiting the US Department of Agriculture’s weekly export sales report, due on Thursday.
“Internationally, there are rumours that textile orders from the EU (European Union) are being either postponed or cancelled as another economic shutdown looms,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
Though German Chancellor Angela Merkel ditched a plan for an extended Easter holiday to try to break a third COVID-19 wave, France may widen its restrictions to three other regions and Belgium imposes new lockdown measures.
Total futures market volume rose by 1,385 to 20,146 lots. Data showed total open interest gained 326 to 229,612 contracts in the previous session.
Certificated cotton stocks deliverable as of March 23 totalled 95,802 480-lb bales, down from 99,239 in the previous session.
Cotton Analyst Naseem Usman told that exporters have halted yarn sales as the depreciating dollar slashed their profit margins, resulting in higher availability of the raw material at cheaper rates in the domestic market, sources from the value-added textile sector said on Tuesday.
Meanwhile, industry sources were also hopeful that the recent initiative by Pakistan for normalisation of relations with India could pave the way for cheaper cotton yarn imports from across the border.
The value-added textile sector has been demanding the government to allow import of yarn from India since prices are cheaper while the locally produced yarn is costlier. Spinners who produce yarn were of the view that the raw material was costlier due to costly cotton imports.
With the falling greenback rates, imported cotton would also be much cheaper for the industry in Pakistan. Pakistan is importing cotton from many countries including the United States which increased the cost of production.
Cotton production in the country fell by 34.4 per cent against the target while consumption continues to increase.
“The recent decline in yarn prices is neither significant nor there is any surety that prices would remain stable as it is mainly because of a sudden drop in US dollar prices,” said Aamir Aziz, an exporter of finished textile products.
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4800 to Rs 6300 per 40 kg.
The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
The Spot Rate remained unchanged at Rs 12200 per maund. The Polyester Fiber was available at Rs 220 per Kg.
Copyright Business Recorder, 2021
Comments
Comments are closed.