Trading activity came down on the cotton market on Tuesday despite fresh decline in the prices, dealers said. The Karachi Cotton Association (KCA) official spot rate was inert at Rs 8,500, they said. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000, they said.
In ready business nearly 1000 bales of cotton changed hands between Rs 7500-8000, they added. According to the market sources, mills and spinners were away from the market to see prices at their psychological levels. Because they feel prices are still on upside as no let-up was seen in price fall in the international market, they said.
Other analysts said that decline in cotton yarn rates is also a big concern for the cotton traders as spinning industry is suffering from huge losses because local buyers of its yarn are backing out of their deals or insisting a prices revision in view of decline in the global cotton market. Experts were of the view that if present trend in the global market continues, rates may go down further in the local market.
In the meantime, some of them said that the prices would remain on upward trend and cost of doing business is high under the circumstances, they said. Cotton yarn traders said that there is not much to discuss because economic situation is not improving the world over, they said.
On Monday the US cotton futures ended mixed as the market consolidated after last week's commodity sell-off and players adjusted positions before the release of a key government crop report, analysts said. The US Agriculture Department's monthly supply/demand report is due on Wednesday. It will contain the first preliminary estimate of supply/demand conditions in the upcoming 2011/12 marketing year (August/July).
"I think people are waiting to see (the report)," said Mike Stevens, an independent cotton analyst in Louisiana. The key July cotton contract on ICE Futures US fell 0.16 cent to settle at $1.454 per lb, trading from $1.4321 to $1.4856. It was the lowest close for cotton in almost four months, Thomson Reuters data showed.
The new-crop December cotton futures rose 1.49 cents to close at $1.2378 cents per lb. Volume traded stood at almost 9,200 lots, nearly two-thirds below the 30-day norm, Thomson Reuters preliminary data showed. The following deals were reported: 200 bales from Dera Gasi Khan sold at Rs 8000, 200 bales from Sadiqabad at same rate, 200 bales from Sadiquabad at Rs 7500 and 400 bales from Bahawal Pur at Rs 7900.