Cotton prices touched the all-time high mark on the local market on Friday on rising demand and hovering uncertainties about the future deals with India, dealers said. The Karachi Cotton Association (KCA) official spot rate was sharply higher by Rs 100 to Rs 7450, they said.
In the ready business, prices hit the new high at Rs 7650 and heading toward the new destination, some 38,000 bales of cotton changed hands between Rs 7350-7650, they said. Seed cotton prices in Sindh soared with solid gain of Rs 150 at Rs 3400-3450, in the Punjab prices were at Rs 3200-3200, they added.
Some analysts said that the exporters rush for cotton buying pushed the prices higher on the local market, the other factor, which is very obvious soaring prices in the NY market following the China demand. A few participants were of the opinion that the cotton prices may rebound after a fall in the cotton market in the coming days because prices have crossed the all-time high level. Locally, cotton dealers are facing tough time as they are concerned about deals for nearly one million bales after India stopped registering cotton exports.
Pakistani traders say any cancellation of Indian contracts or even delays in shipments would spell trouble for the textile industry, which accounts for about 60 percent of the country's total exports. Textile firms in the world's third-largest cotton consumer have looked to neighbouring India, the world's second largest producer, after massive flood damage to the domestic crop caused an estimated shortfall of about four million bales.
Traders had booked about one million bales for delivery from November to January from India, industry officials say. In India cotton dealers, buoyed by tight global supplies and healthy demand from China and Pakistan, are seeking $1.32 to $1.35 per lb for December-January shipments, 14-17 cents over New York futures, three exporters told Reuters.
"Demand from China is good. They are buying at around 132 cents per pound," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibres Pvt Ltd, one of the country's leading exporters. Two weeks ago Indian exporters were seeking 120 cents, but raised prices tracking a rally in New York futures, which were trading around 117.65 cents per lb at 0745 GMT - after touching record highs.
In the early trade, the US cotton futures jumped to a record high on Friday, rising more than four percent as the market was buoyed by a rally in Chinese cotton market and a wider weakening trend in the US dollar. China's cotton prices climbed more than two percent, after going 4 percent limit up in the previous session, despite a warning by authorities in Beijing against speculation.
The key December US cotton contract touched an all-time high of $1.198 per lb in early Asian trade. At 0204 GMT, it was trading up 2 percent to $1.172 an lb. Benchmark May 2011 cotton futures, traded on the Zhengzhou Commodity Exchange, rose two percent to 24,405 yuan per tonne.
The following deals were reported: 1000 bales from Upper Sindh sold at Rs 7650, 3600 bales from Mirpurkhas at Rs 7450-7550, 3400 bales from Shadadpur at Rs 7450-7500, 3000 bales from Tando Adam at Rs 7475-7500, 2800 bales from Sanghar at Rs 7350-7500, 1000 bales from Nawahshah at Rs 7500-7550, 3000 bales from Khairpur at Rs 7475-7500, 2000 bales from Upper Sindh at Rs 7550-7600, 600 bales from Hyderabad at Rs 7500, 1000 bales from Hasilpur at Rs 7350-7400, 1200 bales from Fort Abbas at Rs 7450, 2000 bales from Khanewal at Rs 7400-7450, 800 bales from Upper Sindh Arifwala at Rs 7450, 2000 bales from Rajanpur at Rs 7500-7600, 1000 bales from Chichawatni at Rs 7450, 2000 bales from Burewala at Rs 7450, 1000 bales from Chistian at Rs 7400, 2000 bales from Haroonabad at Rs 7350-7400, 600 bales from Bhawal Nagar at Rs 7450 and 2000 bales from Bahawal Pur at Rs 7400.
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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 14.10.2010
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37.324 Kgs 7,450 120 7,570 7,470 + 100
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Equivalent
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40 Kgs 7,984 120 8,104 7,997 + 107
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