Exporters' demand lead to cause revival of normal activity on cotton market
Thanks to the exporters' recent demand, causing revival of normal business activity on the cotton market after a long gap, dealers said on Friday. 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, over 3000 bales of cotton changed hands between Rs 6,500-8500, they added.
Market sources said that since prices started falling on the global market and introduction of new taxes on unregistered textile units, trading activity almost came to halt in the local market. Now another development is the decision to resume futures trade to bring more activity in the cotton business, experts said. But the issue of futures contracts is being criticised by all stake-holders, such as the Karachi Cotton Association (KCA), All Pakistan Textile Mills Association (APTMA), Pakistan Cotton Ginners Association (PCGA), Farmer Association of Pakistan (FAP) and Pakistan Cotton Forum (PCF), they said.
The move by Securities and Exchange Commission of Pakistan (SECP) received condemnations as it was noted that the futures contracts have been opened under the aegis of Pakistan Mercantile Exchange Limited (PMEX) without taking into confidence all stake-holders, they said. In the meantime, the SECP defending its move said that the decision of the futures contracts would benefit farmers, spinners, ginners, traders and textile manufacturers. Commenting on the present trend in the market, some analysts said that buyers and sellers are agreed on meeting ground. The ginners, some weeks ago were hoping for high profit for their unsold stock, fading hopes are now ready to sell stuff as early as possible because days are not far when the new crop will start arriving, which will be no doubt more attractive for the buyers.
According to report, a group of Indian ministers will decide on increasing the limit of cotton exports from the current 5.5 million bales, trade secretary Rahul Khullar said on Thursday. India has revised downwards its cotton output estimates for 2010/11 by more than five percent, due to untimely rain, dimming chances of exports topping the currently permitted 5.5 million bales. The Indian cotton year runs from October to September. One bale is equal to 170 kg.
Local cotton traders were of the view that this factor may cause further decline in the current prices and prices may not fluctuate sharply in the near future. Besides, China's cotton imports in 2010/2011 crop year will be "significantly" lower than the earlier prevailing market expectation of three million tonnes due to sluggish consumption, an industry website said on Thursday.
On Thursday the US cotton futures crumbled in the face of investor liquidation to finish at a four-month low as the sell-off in the commodities sector weighed on fibre contracts. Although analysts said the sell-off seemed to be abating cotton futures still skidded to its lowest level since the middle of January.
The key July cotton contract on ICE Futures US dropped the six-cent daily limit to close at $1.443 per lb, with the session top at $1.5512. The new-crop December cotton futures lost six cents as well to finish at $1.1919 per lb. Volume traded stood around 10,600 lots, over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 450 bales of cotton from Mir Pur Bethro sold at Rs 6500, 100 bales of cotton from Khipro at Rs 7800, 200 bales of cotton from Shahdad Pur sold at Rs 8000, 100 bales from Hyderabad at Rs 8000, 200 bales from Rohri at Rs 7900, 1650 bales from Rahim Yar Khan at Rs 7900, 200 bales from Haroonabad at Rs 8000, 200 bales from Sahiwal at Rs 8500 and 200 bales from Sahiwal at Rs 8200.
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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 12.05.2011
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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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