Firmness prevailed on the cotton market on Friday as buyers are ready to grab the floating stock just to save themselves from losses in days to come, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 5,500, they said.
In both Sindh and Punjab, seed-cotton rates are moving between Rs 2300-2500, they said. In the ready business trading activity was good moving around 11,000 bales of cotton changed hands between Rs 5,600-5800 dealers added. Explaining the present trend in the cotton market, some analysts said that firstly fixation of cotton support price of Rs 7000, rains in the Punjab cotton belt and rise in NY cotton market were propelling the buyers to keep purchasing at the present level.
Any kind of damage to the crop after monsoon rains, could cause price flare-up or if the government imposed cotton support price, the prices will start lifting from the current levels, but the fact is that current prices are matching with the buyers' psychological levels.
In fact, present trend in prices is not so bad for both growers and ginners, if growers sell cotton just after picking operations, it will be beneficial for them, but if they keep the stuff to earn high profit, there is chance of fifty fifty, because of volatile market. Free-market economy can help the poor condition of business in the country, the buyers may go away and start seeking other markets, some analysts said.
This could be negative impact on the exports of textile products, because textile exporters are facing problems due to fall in the commodity prices the world-wide, they added. Besides, Naseem Usman, who is in Multan to survey the cotton belt, said that crop condition is good and rains are beneficial for the crop.
He also said that current pace of phutti arrivals if continue, the flood of seedcotton comes in the middle of September-October and this would be first time in the history of cotton business. Additionally, according to a report, Australia, the world's third largest cotton exporter, could produce a record crop for the second straight year in 2011/12 as high global prices and ample water supplies encourage crop planting, National Australia Bank (NAB) said on Friday. The NAB also said that high prices and strong supplies of irrigation water are likely to induce increased plantings of irrigated cotton.
On Thursday the NY cotton futures settled lower on profit-taking and investor sales to end a brief surge over the last two sessions, with players keeping an eye on the unresolved US debt crisis, analysts said. The key December cotton futures on ICE Futures US fell 1.04 cents to finish at $1.0257 per lb, trading from $1.0065 to $1.0365. Since hitting a session low of 93.20 cents on Tuesday, cotton shot up by over 12 percent to hit a Wednesday peak at $1.0444, its highest since gapping lower on July 14 and 15. Total market volume on Thursday hit almost 8,400 lots at 2:45 pm EDT (1745 GMT), about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 1000 bales of cotton from Shahdad Pur sold at Rs 5600, 800 bales of cotton from Sanghar at Rs 5600, 600 bales of cotton from Tando Adam at Rs 5600, 600 bales of cotton from Hyderabad at Rs 5600, 800 bales of cotton from Haroonabad at Rs 5700-5800, 400 bales of cotton from Shujabad at Rs 5700, 1000 bales of cotton from Burewala at Rs 5675-5700, 800 bales of cotton from Vehari at Rs 5700-5800, 600 bales of cotton from Hasil Pur 5650-5700, 400 bales of cotton from Bahawal Pur at Rs 5700, 800 bales of cotton from Kabirwala at Rs 5700-5800, 1000 bales of cotton from Chichawatni at Rs 5600-5700, 400 bales of cotton from Gojra at Rs 5650, 1000 bales of cotton from Khanewal at Rs 5700-5800 and 400 bales of cotton from Sahiwal at Rs 5700.
===========================================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
---------------------------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
---------------------------------------------------------------------------
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================================
Rate Ex-Gin Upcountry Spot Rate Spot Rate Difference
For Price Ex-Karachi Ex. KHI. As Ex-Karachi
on 28.07.2011
===========================================================================
37.324 Kgs 5,500 120 5,620 5,620 NIL
---------------------------------------------------------------------------
Equivalent
---------------------------------------------------------------------------
40 Kgs 5,894 120 6,014 6,017 NIL
===========================================================================