Upward march re-emerged on the cotton market on Saturday in the process of speculative buying, dealers said. The Karachi Cotton Association (KCA) spot rate was raised by Rs 300 to Rs 9,100. Seed cotton prices in Sindh and Punjab were unchanged at Rs 4000-4,200, they said.
In ready business trading activity was moderate as approximately 20,000 bales of cotton changed hands between Rs 8,800-9,500, they said. Commenting on the fresh increase in the prices, some analysts said that the local market still is following the NY cotton futures track but it looks prices may drift lower in the near future.
They said that buyers specially, exporters were double minded under the circumstances because they have no clear cut picture of demand and supply in the coming days. On the other hand some leading buyers are on the sidelines not taking part in speculative buying, just watching the developments. It's a factor that recession hurt the world economy, which slowed down the business activity the world over.
Present cotton price flare-up is looking not a sensible factor, the question is how the actual demand would persists. It looks that keeping the possible slowdown in exports, the local mills, specially exporters may not indulge in panic buying, as they have done in the last several sessions, they observed.
They said that another leading factor was reports of resumption of imports under the previously signed import deals, specially from India. Besides, according to a report, major export sectors have taken strong exception to the reports that the government may allow exemption to cotton and yarn trade under the RGST regime, but some experts were of the view that the Federal Board of Revenue may not support the textile industry's demand.
On Friday the US cotton futures closed higher on investor buying in moderate trade, with analysts saying a government crop report underlined tight supplies in the market. The benchmark March cotton contract on ICE Futures US rose 1.02 cents to finish at $1.3697 per lb, trading from $1.353 to $1.4095. On the week, the market gained 3.5 percent.
Trading volume hit about 27,336 lots, roughly a quarter below the 30-day average of 35,361 lots, Thomson Reuters preliminary data showed. Business has recently slowed. On Thursday, cotton volume reached a three-month low of 15,036 lots, exchange data showed.
The March contract climbed by the five-cent daily limit ahead of the US Agriculture Department's monthly supply report but "slowly sold off" after the release of the data, said Lou Barbera, an analyst for brokerage VIP Commodities.
The following deals were reported: 1000 bales of cotton from Shahdad Pur sold at Rs 8800-8900, 1000 bales of cotton from Sanghar at Rs 8800-9000, 600 bales of cotton from Nawabshah at Rs 9000-9200, 400 bales of cotton from Mir Pur Khas at Rs 9000, 800 bales of cotton from Khair Pur at Rs 9200, 1600 bales of cotton from Upper Sindh at Rs 9500, 200 bales of cotton from Haroonabad at Rs 9000, 200 bales of cotton from Darhan Wala at Rs 9000, 400 bales of cotton from Mian Chano at Rs 9200, 1200 bales of cotton from Burewala at Rs 9200-9500, 800 bales of cotton from Sadiqabad at Rs 9500, 3000 bales of cotton from Rahim Yar Khan at Rs 9500, 3600 bales of cotton from Khan Pur at Rs 9500, 800 bales of cotton from Liaquat Pur at Rs 9500, 400 bales of cotton from Ahmed Pur at Rs 9500, 400 bales of cotton from Ali Pur at Rs 9500, 400 bales of cotton from Hasil Pur at Rs 9500, 400 bales of cotton from Shadan Lund at Rs 9500, 600 bales of cotton from Dera Ghazi Khan at Rs 9500 and 400 bales of cotton from Fazil Pur at Rs 9500.
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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 10.12.2010
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37.324 Kgs 9,100 120 9,220 8,920 +300
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Equivalent
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40 Kgs 9,752 120 9,872 9,551 +321
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