Bearish trend was witnessed on the cotton market at the weekend, as local prices tracked the global market direction, dealers said The Karachi Cotton Association (KCA) official spot was unchanged at Rs 6,200, they said. Seedcotton rates in Sindh were down by Rs 100 to Rs 2800-2900, prices in Punjab were on the same way, showing sharp decline of Rs 400 Rs 2300-2600, they said.
In the ready business, nearly 4000 bales changed hands between Rs 6025-6,300, dealers added. In the Punjab, cotton belt areas are receiving sporadic rains, which are beneficial for the crop and this factor may help in achieving the current year target of 16 million bales, some analysts said. The rains are not causing disruption of phutti arrivals, they said adding that the growers have adopted wait-and-see attitude to observe further decline, on the other hand, the mills also preferred to be sidelined despite fall in the rates.
Besides, both ginners and growers have limited capacity to hold the stuff for the longer time, they said. The floods of phutti arrivals likely to cause more slide in the prices, if mills take interest in the fresh buying of cotton, this factor may save prices from further decline, they said. India is looking for cotton selling, but in the absence of bulk demand there is increasing dullness and traders are looking disturbed under the circumstances, they said.
On Friday the NY cotton futures closed down their five-cent limit, hit by a massive wave of investor liquidation in the December/March spread which kept fiber values pinned at nine-month lows. It was the sixth straight weekly loss for cotton and the biggest single weekly decline since December 2008, as demand repercussions from the market's brief historic spike above the $2 per lb level in May continued to unfold, leading the market lower in search of its fair value.
The key December cotton futures on ICE Futures US plummeted to its five-cent downside limit, to end at 99.46 cents per lb. The session high was $1.0345 per lb. It was the lowest close for the second-position contract since early October 2010, Thomson Reuters data showed.
Certificated cotton stocks deliverable against the ICE No 2 cotton futures contract as of July 14, totalled 51,261 (480-lb) bales, up from 44,477 the previous session. Open interest in the December contract fell by 1,234 lots as of July 15, while interest in March eased 450 lots. Total market volumes picked up as the sell-off took hold on Friday, with 26,700 lots traded at 3:11 pm EDT (1911 GMT), more than a third above the 30-day norm, Thomson Reuters preliminary data showed.
The following deals were reported: 200 bales of cotton from Sanghar sold at Rs 6250, 400 bales from Haroonabad at Rs 6150, same figure from Deepal Pur at Rs 6o75-6100, 200 bales from Shujaabad at Rs 6300, 1000 bales of cotton from Burewala at Rs 6025-6125, 400 bales from Chichawatni at Rs 6100, 200 bales from Mian Chunnun at Rs 6200, 600 bales from Sahiwal at Rs 6050-6150 and 600 bales from Khanewal at Rs 6200-6300.
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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 15.07.2011
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37.324 Kgs 6,200 120 6,320 6,320 NIL
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Equivalent
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40 Kgs 6,645 120 6,675 7,865 NIL
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