Soaring prices forced the buyers to keep to the sidelines on the cotton market on Wednesday due to sharp and persisting increase in the NY cotton futures, dealers said. Karachi Cotton Association (KCA) official spot rate was inert at Rs 12000, they said. Phutti prices in Sindh and Punjab were at Rs 4200 and Rs 5400, they said.
Market sources said that persisting higher trend in the New York cotton market rendered the genuine buyers unable to keep their normal business. On the other hand the ginners were on the sidelines in anticipation of further rise in the rates, they added.
The cotton buyers got fed up of prevailing uncertainties regarding prices as it looks that prices have no limit, except going up, they said and added that Indian news was also a factor behind the lacklustre trade. Naseem Usman said that phutti arrival in Pakistan Cotton Ginners Association (PCGA) is expected nearly 1.6 million bales till February 28 2011.
According to a report, India has revised downwards its cotton output estimate for 2010/11 by more than five percent, due to untimely rains, industry officials said on Tuesday, dimming chances of exports topping the currently permitted 5.5 million bales.
Overseas demand for cotton from India, the world's second-biggest producer, rose after bad weather hit crops in China and Pakistan, both leading markets for the fibre. The latest estimate of the Cotton Advisory Board (CAB) put India's output from the harvest at 31.2 million bales in 2010/11, lower than the previous estimate of 32.9 million bales, but still 5.8 percent higher than the year-ago period which was hit by drought.
CAB comprises textile stakeholders including the government, cotton growers, industry associations, traders and ginners. India's cotton output forecast is reviewed periodically. On Tuesday, the US cotton futures closed higher on speculative buying but profit-taking knocked the market back after it rose the daily limit, analysts said.
Open interest in cotton futures fell to its lowest level in seven months as investors rotated out of cotton although market fundamentals still were seen as bullish given tight supplies and steady demand going forward. The key May cotton contract on ICE Futures US rose 2.37 cents to finish at $1.936 per lb, trading from $1.9157 to the seven-cent limit up at $1.9823. Last week, the contract hit a record top at $2.1176 per lb.
Open interest in the market hit a seven-month low at 174,074 lots as of February 28, data from ICE Futures US showed. Volume traded on Tuesday though stood about 32,300 lots, some 3 percent over the 30-day norm, Thomson Reuters preliminary data showed. Not a single deal was reported till our going to Press.
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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 01.03.2011
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37.324 Kgs 12,000 120 12,120 12,920 NIL
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Equivalent
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40 Kgs 12,860 120 12,980 12,980 NIL
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