Speculative buying pushed the rates higher on the cotton market on Tuesday in process of trading, dealers said. The Karachi Cotton Association (KCA) official spot rate was appreciated by Rs 100 to Rs 8,300, they said. In the ready business activity came down as over 26,000 bales of cotton changed hands between Rs 8,300-8,700, they said.
Seed cotton prices in Sindh and Punjab were higher by Rs 50-100 to 3800-4000, they added. Some analysts said that tight supplies were the main factor behind the upward trend in the rates and another reason is bullish trend in the New York market.
They said that bulls were back in the US cotton market and it appeared that in sympathy, the local market is adopting the same path. Some experts were of the view that in fact, speculators were active and trying to increase the rates to gain profit and the other factor behind the rising trend is that ginners were not ready to oblige the buyers in anticipation of better rates in the coming days.
In the meantime, cotton traders were keeping an eye on the Pakistan Cotton Ginners Association (PCGA) fortnightly report to assess the future line of action, they said. According to a report, global cotton prices reached record highs in October, an international farm group said on Monday, noting volatility was also at record levels for the first three months of a season.
The International Cotton Advisory Committee secretariat said in a report that the Cotlook A Index reached a record $1.47 per pound, up from the previous high of $1.19 per pound set in April 1995. The index averaged $1.27 per pound for the month of October, 89 percent above October 2009.
Another report showing that cotton prices in the United States and China rallied to new highs Tuesday, with US prices at their highest in almost 150 years on worries about harvests, strong demand and massive speculative interest in the market. China's benchmark Zhengzhou cotton rose to a record high for a second consecutive day to touch 29,255 yuan a tonne, a rise of almost three percent on the day. The most active May contract also climbed to a record high of 28,850 yuan per tonne.
On Monday the US cotton futures ended the daily limit up as speculative funds and investors bought aggressively due to strong cotton prices in China and early weakness in the dollar, analysts said. Cotton hit its session high early as the dollar slid and stayed there even as the US currency firmed against euro and yen after stronger manufacturing data, though those gains in the dollar were fleeting. Currency markets are bracing for more monetary easing from the Federal Reserve this week.
A weaker dollar normally boosts commodities because most are denominated in the greenback. Cotton also enjoys strong fundamentals: tight stocks and strong mill demand. The benchmark December cotton contract increased the 4.00-cent daily limit to finish at $1.2926 per lb. The session low was at $1.258. The total amount traded was slightly below average. Cotton volume reached 24,000 lots, about seven percent below the 30-day average of 26,000 lots, Thomson Reuters preliminary data showed.
The following deals were reported: 3000 bales of cotton from Shahdad Pur sold at Rs 8300-8400, 2000 bales from Tando Adam at Rs 8300-8400, 1000 bales from Mir Pur Khas at Rs 8300, 200 bales from Matiyari at Rs 8400, 2000 bales from Nawabshah at Rs 8350-8400, 2000 bales from Khairpur at Rs 8400-8500, 2000 bales from Upper Sindh at Rs 8500-8550, 200 bales from Samandari at Rs 8400, 2000 bales from Bahawal Pur at Rs 8400-8500, 400 bales from Muridwala at Rs 8400-8450, 400 bales from Uch Sharif at Rs 8500, 200 bales from Ghaziabad at Rs 8500, 200 bales from Fort Abbas at Rs 8500, 2000 bales from Haroonabad at Rs 8400-8500, 400 bales from Lodhran at Rs 8400, 400 bales from Hasil Pur at Rs 8400, 1000 bales from Khanewal at Rs 8500, 400 bales from Mubarak Pur at Rs 8500, 400 bales from Ali Pur at Rs 8500, 400 bales from Chichawatni at Rs 8500-8600, 1000 bales from Rahim Yar Khan at Rs 8500, 200 bales from Arifwala at Rs 8500, 200 bales from Mianwali at Rs 8550, 2000 bales from Rajan Pur at Rs 8500-8600, 200 bales from Bakhar at Rs 8550, 200 bales from Shadan Lund at Rs 8600and 600 bales from Rajan Pur at Rs 8700.
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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 01.11.2010
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37.324 Kgs 8,300 120 8,420 8,320 +100
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Equivalent
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40 Kgs 8,895 120 9,015 9,908 +107
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