Trading activity improved on the cotton market on Tuesday as mills extended buying on expectations of corrective measures and concessions by the government to boost exports, dealers said. The Karachi Cotton Association (KCA) official spot rate was raised by Rs 150 for the second day in a row to Rs 7,250, they said.
In the ready business, approximately, 13000 bales of cotton changed hands between Rs 7200-7500, they said. Seed cotton prices in Sindh came under pressure, falling by Rs 100-50 to Rs 3200-3300 and in Punjab rates were unchanged at Rs 3100-3300, they added.
Market sources said that prices showed softness slightly but it appears that the prices may go up in the coming days. Some analysts said that the mills are busy in fresh purchasing on hopes of extended facilities by the government to enhance exports.
It is very obvious that mills are buying despite the higher trend in the rates due to decline in crop. Fortnightly report by the Pakistan Cotton Ginners Association (PCGA) issued on September 15 says some 1,487,000 bales of phutti arrived, showing modest fall against the last year. Another leading factor is uppish trend in the NY cotton market.
Besides, Chinese cotton mills are wary of buying the fibre at record high prices, which may hurt a demand recovery seen from the start of this year, industry players said on Monday. Chinese government sold 20,098 tonnes of cotton from its reserves at auction on Sunday, with prices ranging between 18,330 yuan and 21,980 yuan per tonne. Earlier, cotton mills had said they were only able to afford cotton prices of below 20,000 yuan per tonne.
On Monday the NY cotton prices surged more than three percent, jumping past the $1 a lb level for the first time since 1995 as clothing makers and other commercial users who sat out the summer rally were forced to buy at prices driven up by fund investors.
Buying by speculators, mills and trade accounts stoked the rally. Investment funds sitting on money making long positions were also buyers anticipating cotton prices would get a further boost from consumer demand down the road. High cotton prices have squeezed clothing makers in the United States and around the world. ICE Futures US data showed open interest in the cotton market stood at a year low of 153,514 lots as of July 13. Since then, open interest in the cotton market climbed over 50 percent to hit 234,697 lots as of September 17.
For only the second time since 1960, cotton prices on the ICE Futures US cracked $1 at the start of trading in Asia and the key December cotton contract jumped as much as 3.76 cents or 3.83 percent to trade at $1.0198 per pound. Cotton eased off the session high but remained up more than one percent at over $1 a lb.
The following deals were reported: 200 bales of cotton from Sakrand sold at Rs 7250, 200 bales from Moro at Rs 7250, 3000 bales from Tando Adam at Rs 7300-7500, 1600 bales from Mir Pur Khas at Rs 7300-7500, 800 bales from Nawabshah at Rs 7300-7500, 600 bales from Khair Pur at Rs 7400, 1000 bales from Chichawatni at Rs 7200-7300, 400 bales from Kasso wal at Rs 7200-7300, 800 bales from Haroonabad at Rs 7250-7400, 200 bales from Muridwala at Rs 7250, 200 bales from Gojra at Rs 7250, 1000 bales from Mian Channu at Rs 7300, 1400 bales from Burewala at Rs 7250-7300, 400 bales from Bahawal Nagar at Rs 7300, 200 bales from Khanewal at Rs 7300, 400 bales from Haroonabad at Rs 7400 and 200 bales from Chistian 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 20.09.2010
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37.324 Kgs 7,250 120 7,370 7,220 +150
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Equivalent
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40 Kgs 7,770 120 7,890 7,729 +161
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