Firm trend was seen on the cotton market on Wednesday following the new Indian policy, in which it permitted to export cotton without mandatory licences, but registration process will be required, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 6,700, they said.
In the ready business, over 7000 bales of cotton changed hands between Rs 6350-7200, they said. Seed cotton prices in Sindh were lower at Rs 2500-2600 and in Punjab rates were at Rs 3000-3200, they added. Market sources said that weather condition is improving, indicating that ginning factories may start operations in most parts of the country. But it is expected that prices may come down from the present levels after the Indian move, other analysts said.
On Tuesday, according to an Indian notification, it has allowed cotton exports without mandatory licences, but the registration process will be required. India halted export registration on April 19 and allowed exports under licence on May 21 to rein in prices.
In the absence of official figure about the damage to cotton crop, this move may help Pakistani cotton traders under the circumstances, they said. It is also likely that the mills adopt wait-and-see attitude till the announcement of extent of damage to cotton crop, they said.
Besides, according to a report, China's top cotton growing area of Xinjiang in the north-west likely to have a bumper crop this year even though the harvest could be delayed by two weeks, industry officials said. "Weather should not be a problem and we expect Xinjiang's cotton output to grow slightly to 3.2 million tonnes," said Dong Shuzhi, assistant to the president of Jinshi Futures Co Ltd, who is assessing crops in the region.
On Tuesday the cotton futures closed lower as fiber contracts dawdled while waiting for fresh leads and analysts are mulling the next move of a market that recently hit a 3-1/2 month high. ICE Futures US benchmark December cotton contract lost 0.16 cent to finish at 83.86 cents per lb. The contract traded from 83.76 to 84.39 cents. It was an inside day since the range was within Friday's 83.75 to 84.79 cents band. Volume traded in the December contract hit 7,172 lots at 2:30 pm EDT (1830 GMT). Total volume traded at 2:31 pm was at 10,361 lots, much lower than the 30-day average of 15,474 lots, preliminary Thomson Reuters data showed.
The following deals were reported: 200 bales of cotton from Sultanabad done at Rs 6350, 2000 bales from Shahdadpur at Rs 6400, 1000 bales from Tando Adam at Rs 6400, 500 bales from Hyderabad at Rs 6350-6400, 1000 bales from Sanghar at Rs 6350-6450, 1000 bales from Burewala at Rs 7100-7150, 600 bales from Chichawatni at Rs 7100, 200 bales from Burewala at Rs 7200, 400 bales from Pakpattan at Rs 7100, and 600 bales from Khanewal at Rs 7100/7150.
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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 17.08.2010
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37.324 Kgs 6,700 120 6,820 6,820 NIL
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Equivalent
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40 Kgs 7,180 120 7,300 7,300 NIL
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