Trading activity improved on cotton market despite prices moving upward

Improved activity was seen on the cotton market on Tuesday as mills and spinners showed interest in fresh buying due to continued rise in the international market, dealers said. The Karachi Cotton Association (KCA) spot rate was unchanged Rs 10,800, they said. Phutti prices in Sindh and Punjab were unchanged at Rs 4200-5200, they said.
In the ready business about 30,000 bales of cotton changed hands between Rs 10,400-12,000, they added. Market sources said that the mills were active after observing that prices are still on upward on the global market despite the long holidays in China on account of New Year (Luner Year) celebrations.
Some market players were anticipating that prices may stabilise but the rates are going up and this factor propelled the mills to make new deals. India adopted delaying attitude toward contracts to sell cotton despite strong production. All factors are causing uncertainties among the cotton traders, they added.
Besides, some analysts were of the view that prices slip marginally as a result of falling demand by the mills during holidays in China. According to a report, China's cotton planting area likely to rise 9.8 percent in 2011 from the same period last year, the China Cotton Association forecast.
Farmers are willing to plant more cotton this year after prices surged in 2010, according to the survey published during the weekend on the association's web site. The survey was based on a poll of farmers in the major producer area of Xinjiang and 12 provinces.
On Monday the US cotton futures rose more than two percent, as investors continued to price in tighter supply even as a US cotton plantings survey due this week is expected to show farmers intend to raise production. The rally put cotton back within easy reach of the historic, post-US Civil War high hit on Thursday at $1.7283 a lb before, a 2.7 percent pullback on Friday.
That did not stop the key March cotton contract on ICE Futures US from rising 3.69 cents to settle at $1.6844 per lb, near the upper end of its $1.6546 to $1.6875 session range. Estimated total volume stood was about 21,800 lots, roughly 15 percent above the 30-day average, Thomson Reuters preliminary data showed.
The following deals were reported: 400 bales of cotton from Hyderabad sold at Rs 10500, 800 bales of cotton from Mirpur Khas at Rs 10500-10600, 1000 bales of cotton from Mehrabpur at Rs 11000, 2000 bales of cotton from Rohri at Rs 11000, 1400 bales of cotton from Ghotki at Rs 11000-11500, 2000 bales of cotton from Dehrki at Rs 11500, 800 bales of cotton from Upper Sindh (credit) at Rs 12000, 200 bales of cotton from Vehari at Rs 10400, 400 bales of cotton from Yazman Mandi at Rs 10500, 600 bales of cotton from Ahmedpur at Rs 10600, 400 bales of cotton from Hasilpur at Rs 10600, 800 bales of cotton from Khanpur at Rs 10800-11000, 1200 bales from Sadiqabad at Rs 11000, 400 bales of cotton from Bahawalpur at Rs 11000, 600 bales from Tounsa Sharif at Rs 11000, 3300 bales of cotton from Rahim Yar Khan at Rs 11000, 1000 bales of cotton from Noorpur at Rs 11000, 2000 bales of cotton from Khanewal at Rs 11000.