Prices fell further and may also touch an one-year old level if rates slide continues on the cotton market owing to good phutti arrivals, dealers said on Wednesday. The Karachi Cotton Association (KCA) official spot rate further was lowered after shedding Rs 500 more to Rs 7,100, they said. Seedcotton rates came down by Rs 300-200 in Sindh at Rs 2800-3000, prices in Punjab fell by Rs 400-300 to Rs 2500-2900, they said.
In ready business, trading activity improved as nearly 3,400 bales of cotton changed hands at Rs 7000-7550, they added. According to the market sources, cheaper rates attracted the buyers and made buying to meet the near-term requirements. Cotton traders were expecting that business will improve in the coming days as international companies are keeping an eye over the positive developments for the purpose of investment, some experts said. For the improvement in the local and foreign investments, the government is introducing several plan.
Naseem Usman said that a Swiss company is setting up a godown in Karachi for the doing business in several commodities, particularly in cotton after positive trend in phutti arrivals. The ginners are now preferring to sell moistured cotton, which could be quality problem for them, they said. After rains in the Punjab cotton growing areas, wet cotton has storage problem, they added.
It's a fact that traders are satisfied with the progress in cotton arrival but on the other hand cotton yarn still lacks buyers interest, which is causing financial problems for the traders, mills and exporters, as well, they said. According to a report, India's cotton exports in 2011/12 could fall from the 6.5 million bales approved the previous year as poor rains reduce the amount of land sown with the crop in the world's second-largest producer and exporter. Initially the country's cotton acreage was expected to rise 15 percent in 2011/12 on record high prices, but scant rainfall in key growing areas may prompt farmers to go for other crops like corn and soybean and even trim per hectare yield of cotton.
On Tuesday the cotton futures finished lower on a fresh round of investor sales as the market failed to derive any inspiration from a recovery in the commodity complex after a holiday weekend, brokers said. The market was shut on Monday for US Independence Day.
The key December cotton futures on ICE Futures US dropped 2.29 cents, or nearly two percent, to settle at $1.1552 per lb, dealing from $1.1502 to $1.1959. Volume traded stood at 16,100 lots as of 2:41 pm EDT (1841 GMT), about a fifth below the 30-day norm, Thomson Reuters preliminary data showed.
Analysts said the December contract's Bollinger band, a popular technical indicator for traders to determine a relative definition of high and low prices, showed it is approaching the lower end of that band and may go below it. Thomson Reuters data showed the bottom of the range around $1.137.
The following deals were reported: 200 bales of cotton from Hyderabad sold at Rs 7550, 200 bales from Sanghar at Rs 7200, 400 bales from Shahdad Pur at Rs 7200, 200 bales from Khanewal at Rs 7500, 400 bales from Pak Pattan at Rs 7000/7200, 200 bales from Bahawal Nagar at Rs 7000, 400 bales from Vehari at Rs 7000, 200 bales from Gajjo at Rs 7200, 600 bales from Mian Channu at Rs 7000/7300, 200 bales from Chichawatni at Rs 7200, 200 bales from Burewala at Rs 7000 and 200 bales from Burewala at Rs 7200.
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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 04.07.2011
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7.324 Kgs 7,100 120 7,220 7,720 - 500
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Equivalent
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40 Kgs 7,609 120 7,729 8,265 - 536
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