Prices were firm on the cotton market on Tuesday as buyers specially exporters were a little bit active to cover the forward deals, brokers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 8,500, they said. In Sindh and Punjab phutty price of low type was at Rs 2500 and that of superior type at Rs 3000, they said.
In ready business over 4,000 bales of cotton changed hands between Rs 7,100-8,500, they added. According to the market sources some exporters were busy in forward deals in anticipation of lucrative profit in the coming days. But, the mills were not in a haste to make any deal because they were hoping the rates would come down due to better prospects for the next season cotton production, they said.
The ginners are trying to sell all stock at their psychological level, in the meantime, they are sure that now they will not get Rs 13000-14000 in the near-future, they said. On Monday the US cotton futures closed down one percent, pressured by the broad sell-off in commodities and an extension of the weak demand for cotton seen since last week.
The market was likely to fall further in coming sessions, although it could also turn positive by mid-June, when a better assessment could be made of damage caused to the US cotton crop by this month's flooding and drought, traders said. The key July cotton contract on ICE Futures US settled down 1.72 cents, or 1.1 percent, at $1.5389 per lb, dealing from $1.5747 to $1.5321. New-crop December finished unchanged at $1.1976, moving between $1.1850 and $1.2178.
"I expect the July contract to be trading $1.70 upwards and December around $1.40 over the next few weeks, if demand returns and we have a better idea of how the crop fared with all these weather problems." Monday's cotton volume on ICE Futures US was 70 percent below the 30-day average, Thomson Reuters' preliminary data showed.
The following deals were reported: 219 bales of cotton from Nawabshah sold at Rs 8000, 109 bales from Kumb at Rs 8000, 3000 bales from Dulatpur at Rs 8000, (two-month credit), 200 bales of cotton from Rahim Yar Khan at Rs 8200, 100 bales from Multan at Rs 8000, 445 bales from Chani Goth at Rs 8500, 98 bales from Dera Ghazi Khan at Rs 8500, 104 bales from Haroonabad at Rs 7600 and 116 bales Vehari at Rs 7100.
===========================================================================
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 23.05.2011
===========================================================================
37.324 Kgs 8,500 120 8,620 8,620 NIL
---------------------------------------------------------------------------
Equivalent
---------------------------------------------------------------------------
40 Kgs 9,109 120 9,229 9,229 NIL
===========================================================================