Mills active purchasing helped the rates to maintain steady trend on the cotton market on Friday in process of trading, dealers said. The Karachi Cotton Association (KCA) official spot rate was kept unchanged at Rs 8,500, they said. In Sindh price of new Phutti was higher by Rs 150 to Rs 3850 and in Punjab up by Rs 100 to Rs 3,900, they said.
In ready business, above 5000 bales of cotton changed hands between Rs 8300-8850, they said. According to the market sources mills showed interest in the fresh buying despite the higher rates to meet requirements, analysts said. They said that under the circumstances, there are many apprehensions because no one is sure about the future strategy, so some farsighted traders are doing business in a way to avoid the losses.
Some time ago, the NY cotton futures were on downside and now again the direction has changed as futures have started going up on forward buying of cotton, they said. Some analysts said that drought in the Texas and China causing cautious buying of cotton these days as many in the market feared prices can soar and make traders unable to do business in a proper way.
According to a report Indian cotton exporters are offering discounts to New York futures prices for the first time this year to secure sales for an extra one million bales allowed by the government as competition heats up, three exporters told Reuters. The exporters are offering cotton at $1.37 to $1.42 per lb including cost and freight to neighbouring countries, compared with New York July contract's close of $1.6455 per lb on Thursday.
Six months ago, Indian exporters were charging premiums of up to 17 cents per lb over New York futures amid strong demand from leading buyers China and Pakistan, but now competition in supply is intensifying from Australia, Brazil and African countries. "Market dynamics have changed. There are now many suppliers in the world market, so we have to quote prices considering their prices," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, one of India's top exporters. On Thursday the Spot US cotton futures pushed higher for a fourth straight session on Thursday, as short position holders scrambled to cover ahead of the start of delivery period on Friday.
The rest of the board ended lower, falling under the weight of a stronger dollar and disappointing weekly export sales data that saw cancellations in both the old and new crop. "December cotton is struggling because of the terrible sales today," said Keith Brown of Keith Brown and Co in Moultrie, Georgia.
The key December cotton contract on ICE Futures US shed 2.05 cents, or 1.7 percent, to finish at $1.1940 per lb, near the bottom end of its $1.1869 to $1.2302 session range. Spot July climbed 3.33 cents or two percent to end at $1.6455 per lb. The spread between July and December cotton has grown considerably over the past week, growing to its widest level since April, as players still holding short positions in the expiring contract scrambled to cover. "July has a squeeze of sorts about itself," one cotton broker said. Friday marks the first delivery day for the July contract.
The following deals were reported: 200 bales of cotton from Faqirwali sold at Rs 8700, same figure from Hasilpur at Rs 8300, 600 bales from Khanpur at Rs 8600, 2700 bales of cotton from same station at Rs 8665, 1500 bales (mill to mill), 400 bales of cotton (mill to mill) at Rs 8800 and 100 bales of cotton from Haroonabad at Rs 8850.
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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 23.06.2011
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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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