Restraint was seen on the cotton market on Friday as some mills showed little interest in fresh purchasing to meet their urgent needs, dealers said. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11,800, they said. Phutti prices in Sindh and Punjab stayed put at Rs 4500-5900, they said.
In the ready business, about 4000 bales of cotton changed hands between Rs 12,000-13,000, they added. They said that despite the soaring rates of cotton, the mills did some buying to meet their urgent requirements. Speculative buying in of cotton in the United States and India's reluctance to honour the contracts are the major factors, pushing the prices to break all previous records, locally and globally.
Short cotton production in the country on the other hand, caused by floods which damaged the standing crop, which caused chaos like situation among the buyers, they said. According to the Pakistan Cotton Ginners Association's (PCGA) fortnightly report till February 15, production is nearly 11.4 million bales against the last year's figure of 12.6 million bales.
On Thursday the US cotton futures raced to their seven cent upside limit shortly after overnight session opened on Thursday and remained there until the close, setting a new record, as mills rushed to price cotton ahead of first notice day. With the Monday US President's Day holiday, next Tuesday is first notice day and March cotton notices must be submitted by 5 pm EST (2200 GMT) on Friday. March cotton on ICE Futures US closed up seven cents, or 3.55 percent, at $2.0402 cents a lb. an all-time high. Now benchmark May cotton also soared seven cents, or 3.59 percent, to the upper limit at $2.0193 and ended there.
Volume in March futures came to 6,975 lots, with open interest now at 13,427 lots. May volume rose to 9,301 lots with open interest growing to 70,469 lots. After both March and May contracts were locked at the seven cent limit, many players tried to execute their cotton trades synthetically via the options market.
The following deals were reported: 500 bales of cotton from Sanghar sold at Rs 1200-12200, same figure from Khairpur at Rs 12500, 400 bales from Gojra at Rs 12000, 400 from Khanewal at Rs 12300, same figure from Faqirwali at the same rate, same figure from Noor Pur same figure from Muhammadpur done at Rs 13000, 371 bales from Fazil pur and 1200 bales of cotton from Hasil pur all finalised at the same level, they said.
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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 17.02.2011
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37.324 Kgs 11,800 120 11,920 11,920 NIL
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Equivalent
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40 Kgs 12,646 120 12,766 12,766 NIL
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