Prices maintained firm trend on the cotton market on Tuesday amid tight phutti arrivals, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 5,500, they said. In Sindh, seedcotton prices were unchanged at Rs 2400-2500 and in Punjab, rates were up at Rs 2500-2600, they said.
In the ready business, trading activity came down as over 7000 bales of cotton changed hands between Rs 5,300-5800 dealers said. Commenting on the firm trend in the prices some analysts said that growers were not interested in selling of phutti at the lower rates and holding the stock in anticipation of increase in prices.
In the meantime, the Karachi Cotton Association (KCA) is opposing the Trading Corporation of Pakistan's (TCP) intervention to support cotton prices, if prices fall sharply, they said. There were market anticipations about the fall in the rates, after news that India could export an additional 255,000 tonnes of cotton in 2010/11 season ending September, but Indian exporters may have missed the bus as fresh supplies will only ease global prices that are already softening from record highs.
The world's second biggest grower and exporter of cotton which now sits on a huge stockpile, India dithered for months on allowing unrestricted cotton exports, much like it did for wheat where exports were allowed after global prices began falling. Besides, the world cotton output is expected to rise in 2011/12 in most large countries except the United States and could hit record levels in India and Australia, boosted by high prices in the previous year, an international farm group said on Monday.
The International Cotton Advisory Committee (ICAC) secretariat said world production would rise by eight percent to 26.9 million tonnes for the year after cotton prices doubled in 2010/11. On Monday the NY cotton futures ended with strong gains, rallying late to a 2-1/2-week high, as a debt deal that seemed likely to pass the US Congress boosted sentiment and led to an improved technical picture, analysts said. Key December cotton futures on ICE Futures US closed 3.28 cents, or 3.22 percent, higher at $1.0481 a lb. The range stretched from $1.0008 to $1.0532. Since falling to a seven-month low of 93.20 cents early last week, cotton has risen over 13 percent to Monday's peak at $1.0532, a level last seen on July 14.
The rally pushed December futures above a 20-day moving average for the first time since June 15. It was the contract's first close above the moving average since May 24. Adding to the positive technical performance, December futures closed a gap at $1.0446 per lb, making last Tuesday's decline a near-term bottom and opening the door for a quick run up to $1.0885, Stevens said.
Total market volume on Monday came in at 15,645 lots by 3:10 pm EDT (1910 GMT), about three percent above the 30-day average, according to Thomson Reuters preliminary data.
The following deals were reported: 1000 bales of cotton from Shahdad Pur sold at Rs 5300-5400, 600 bales of cotton from Tando Adam at Rs 5350-5400, 1000 bales of cotton from Sanghar at Rs 5300-5400, 800 bales of cotton from Mir Pur Khas at Rs 5300-5400, 400 bales from Hyderabad at Rs 5400, 600 bales from Bahawal Pur at Rs 5550-5700, 400 bales from Kassowal at Rs 5550-5700, 800 bales from Vehari at Rs 5600, 400 bales from Arifwala at Rs 5600, 800 bales from Chichawatni at Rs 5600, 400 bales from Khanewal at Rs 5800 and 200 bales from Kabirwala at Rs 5800.
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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 01.08.2011
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37.324 Kgs 5,500 120 5,630 5,630 NIL
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Equivalent
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40 Kgs 5,894 120 6,024 6,024 NIL
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