Rates came down on the cotton market on Wednesday after the news that India would begin cotton export from November, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 7250, they said. In ready business, around 20,000 bales changed hands at Rs 4200-7400, they said.
Seed-cotton prices in Sindh dropped by Rs 150-175 to Rs 3100-3125. in Punjab prices lost Rs 100 to Rs 2900-3100, they said. Commenting on the present trend in the market, Naseem Usman, chairman of Karachi Cotton Brokers Forum (KCBF), said that prices might fall further if NY cotton futures moved down from 15-year high. In the meantime, it is most likely that the ginners may indulge in panic selling and this factor would push the rates further lower, he added.
According to the news that Indian Textiles Secretary Rita Menon said that the world's second biggest producer and exporter of cotton would delay exports by one month until November 1, 2010. Delayed supplies from India may fuel New York cotton prices, which jumped to their highest in 15 years on Tuesday, extending a fund-driven rally.
Furthermore, Indian cotton traders may renegotiate export deals and cancel a few following a surge in local prices and a government decision to delay shipments, Indian industry officials said. Besides, the China Cotton Association on Wednesday cut its 2010 cotton output estimate to 6.7 million tons from a previous estimate of 6.96 million tons, citing lower yields.
On Tuesday, the NY cotton futures finished at a 15-year peak for the second day in a row on a steady influx of investment fund and mill buying which kept the market poised to challenge all-time highs. ICE Futures US key December cotton contract increased 1.31 cents to close at $1.0524 per lb. The all-time high of $1.172 is just under 12 cents away. Total cotton volume stood at 22,397 lots at 2:55 pm (1855 GMT), over a third above the 30-day average of 16,035 lots, according to preliminary Thomson Reuters data.
Open interest in the cotton market hovered at levels near a two-year high as it stood at 237,646 lots as of Monday, up from the previous session's 236,866 lots. Following deals were reported: 2200 bales from Tando Adam sold at Rs 72007400, 1600 bales from Mir Pur Khas at Rs 7300-7400, 800 bales from Sultanabad at Rs 7200-7400, 1800 bales from Shahdad Pur at Rs 7200-7350, 1000 bales from Shah Pur Chakar at Rs 7200-7350, 2000 bales from Upper Sindh at Rs 7350-7400, 1600 bales from Khair Pur at Rs 7350-7375, 2000 bales from Nawabshah at Rs 7350-7400, 1000 bales Hala at Rs 7300-7400, 200 bales from Chistian at Rs 7200, 200 bales from Daran Wala at Rs 7200, 400 bales from Hasil Pur at Rs 7200, 1400 Burewala at Rs 7200-7300, 1600 bales from Haroonabad at Rs 7200-7275, 200 bales from Bahawalpur at Rs 7200, 200 bales from Mongi Bangla at Rs 7250, 200 bales from Gojra at Rs 7250, 200 bales from Fort Abbas at Rs 7250, 200 bales from Kassowa at Rs l7300, 200 bales from Ghaziabad at Rs 7300, 200 bales from Kahanewal at Rs 7300, 200 bales from Saiwa at Rs l7300, 200 bales from Bakhar at Rs 7300 and 200 bales from Arif wala at Rs 7300.
===========================================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
---------------------------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
---------------------------------------------------------------------------
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================================
Rate Ex-Gin Upcountry Spot Rate Spot Rate Difference
For Price Ex-Karachi Ex. KHI. As Ex-Karachi
on 28.09.2010
===========================================================================
37.324 Kgs 7,250 120 7,370 7,370 Nil
---------------------------------------------------------------------------
Equivalent
---------------------------------------------------------------------------
40 Kgs 7,770 120 7,890 7,890 Nil
===========================================================================