Cautious buying was seen on the cotton market on Wednesday as mills and spinners did purchasing but just to meet the urgent needs, dealers said. The Karachi Cotton Association (KCA) official spot rate was inert at Rs 8,500, they said. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000, they said.
In ready business nearly 2500 bales of cotton changed hands between Rs 6,500-8200, they added. Market sources said that some mills and spinners did make some deals, but most of the buyers kept to the sideline due to lack of buying interest. In addition, they said that the main concern for the traders is falling demand of cotton yarn, which is causing erosion in the rates. As a whole, ancillary industry, value-added sector and ready-made garment may suffer if power failure and gas shortage continue in the country, this factor may hurt country's textile exports.
According to a report, China's cotton imports in April were 210,400 tonnes, down 35 percent from the same period last year, according to an industry website, citing customs data. The April imports were down 24 percent, or 66,000 tonnes less from March, according to the report published on www.cncotton.com, a website under China National Cotton Reserves Corp.
China imported a total of 1.06 million tonnes of cotton in the four months of 2011, down 9.2 percent on year, it said. On Tuesday the US cotton futures ended higher on investor short-covering as the trade braced for release of a key government crop report on Wednesday, analysts said.
The US Agriculture Department's monthly supply/demand report is due out tomorrow at 8:30 am EDT (1230 GMT). It will contain the first estimate of global supply/demand conditions in the upcoming 2011/12 marketing year (August/July). The key July cotton contract on ICE Futures US rose the six cent limit to settle at $1.514 per lb, with the day's low at $1.43. The new-crop December cotton futures went up 2.14 cents to close at $1.2592 cents per lb. Volume traded stood at almost 17,700 lots, about a fifth below the two-thirds below the 30-day norm, Thomson Reuters preliminary data showed.
July shot up on switch trade and short-covering, running higher because it was heavily oversold, dealers said. The rest of the board posted much more modest increases. The following deals were reported: 240 bales from Sultanabad at Rs 6500, 1500 bales from Mirpur sold at Rs 8200 (75 days credit), 151 bales from Jalalpur at Rs 8200 on credit, 200 bales from Rahim Yar Khan at Rs 8000 and 265 bales from Basti Malook at Rs 7300.
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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 10.05.2011
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37.324 Kgs 8,500 120 8,620 8,620 NIL
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Equivalent
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40 Kgs 9,109 120 9,229 9,229 NIL
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