Despite the low volume of trade, official spot rate was higher on the cotton market on Friday ahead of a crucial meeting of stake-holders with the finance minister, dealers said. Karachi Cotton Association (KCA) official spot rate was enhanced by Rs 200 at Rs 12,200, they said.
In Sindh and Punjab phutti price of low type was at Rs 4000 and superior type also unchanged at Rs 5000, they said. In ready business, nearly 1500 bales of cotton finalised between Rs 11800-13000 (credit), they added. Market sources said that leading participants were not taking interest in fresh buying because they are in a wait-and-see mood ahead of a meeting of all stake-holders with the Finance Minister Hafiz Shaiek at weekend, which will take several decisions including zero-rate facility for the exporters.
Cotton analyst, Naseem Usman said that the government wants to implement 5-10 percent tax on the non-registered firms in the meantime unregistered firms are interested in paying 3-5 percent tax on the textile products. Anyway it is all up to the Saturday's meeting, which will make decision about the future strategy towards the new taxes, he said.
According to a report, Australia, one of the world's leading cotton exporters, has started to reap what is expected to be a record crop, an industry spokesman said on Friday, but yields are set to be hit by floods in some areas and dry conditions in others.
Harvesting of the July-June year Australian crop has kicked off in northern Queensland state on Australia's east coast and will move south to end around June. China's total cotton-growing area this year is likely to rise five percent from a year ago, the Chinese Academy of Agricultural Sciences (CAAS) said, revising upwards its earlier forecast of a 4.1 percent increase.
On Thursday the US cotton futures settled higher on investor buying and as Texas, the top growing state in the country, suffers a drought said to be its worst in more than 40 years, analysts said. The key May cotton contract on ICE Futures US climbed 6.95 cents to end at $2.0882 per lb, dealing from $1.9687 to the 7-cents limit up at $2.0887.
Volume traded stood at around 25,800 lots, almost 15 percent below the 30-day norm, Thomson Reuters preliminary data showed. Open interest in the market, an indicator of investment exposure in cotton, was at 176,212 lots as of March 23, a level that is close to an 8-month low, data from ICE Futures US showed.
The following deals were reported: 200 bales of cotton from Mailsi sold at Rs 11800, 400 bales of cotton from Fort Abbas at Rs 12250, same figure from Haroonabad at Rs 12300, 200 bales from Shujaabad at Rs 13000 (credit) and 239 bales from Ali Khan at the same rate, dealers 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 24.03.2011
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37.324 Kgs 12,200 120 12,320 12,120 +200
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Equivalent
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40 Kgs 13,075 120 13,980 12,980 +215
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