Business activity came down on the cotton market on Friday as mills are still reluctant buyer due to financial crunch, dealers said. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 12,000, they said. In Sindh and Punjab phutti price of low type was at Rs 3500 and that of superior type at Rs 4500, they said.
In ready business, nearly 500 bales of cotton changed hands between Rs 11000-11200, they added. Markets sources said that prices were lower on the global market and this factor propelled the local buyers to keep to sideline and watch the developments. In China, India and Bangladesh prices of cotton came down due to weak demand. So, the local exporters were not taking interest in the fresh purchasing, they said.
Some local brokers said that since the implementation of tax talks on the textile goods started, the cotton traders indulged in uncertainties, resultingly business activity came down during the last several sessions. They also said that mills sold approximately 2000 bales of cotton to the exporters at Rs 11700 couple of days ago.
According to a report, Australia could harvest another bumper cotton crop next year, possibly matching this year's estimated harvest of a record four million bales, an industry official said, noting that growing conditions remained ideal.
Australia, one of the world's major cotton exporters, is hoping to cash in on high global cotton prices driven by strong demand from China and India, which together consume around 60 percent of world output. On Thursday the US cotton futures ended down for a third straight session, under pressure from a disappointing weekly export sales report.
The key May cotton contract on ICE Futures US fell 1.31 cents to settle at $1.9604 per lb, after dealing from a near two-week low at $1.9406 to $1.9788. Second-position July dropped 2.64 cents to close at $1.78 per lb, while new-crop December cotton shed 2.25 cents to end at $1.3245. Total volume traded in the cotton market slowed to 19,295 lots, about a quarter below the 30-day norm, Thomson Reuters preliminary data showed.
Analysts said recent market weakness was sustained following the release of the weekly export sales report from the US Department of Agriculture (USDA). The following deals were reported: 159 bales of cotton from Dharki sold at Rs 11000, 200 bales from Mian Chunoon at Rs at the same rate and same figure from Mohammadpur Dewan at Rs 11200, they added.