Mills inactivity, value-added units strike keep cotton market dormant
KARACHI (May 13 2010): Mills did not show any interest in fresh buying due to higher prices on Wednesday, dealers said. The Karachi Cotton Association (KCA) official spot was unchanged at Rs 6700, they said. In the ready business no deal was reported as ginners showed no flexibility in their attitudes. Yarn prices also came down mainly because of downward trend in the international market, they said.
Commenting on the present trend in the market, some analysts said that mills were on the sidelines due to higher prices and mainly because of strike by the value-added sector. Naseem Usman said that the world over, including Pakistan cotton sowing is being increased by 12-14 percent to meet the demand and also to bring down the prices to a certain level. He also said that Regulatory Duty on the yarn is also expected to overcome the rising crisis and to meet the local demand.
It is reported that Benin’s government said on Monday it has raised the official purchase price for its chief export raw cotton to 200 CFA francs (41 cents) per kg for the 2010-11 harvest, from 190 CFA last season. “This improved price is an incentive to encourage producers to raise cotton output amid unfair competition on the international market,” the government said in a release.
West African cotton production has been hard hit in recent years by slumping global market prices, which have made regional growers uncompetitive. On Tuesday the NY cotton futures settled easier on sales by small investors as the market digested release of a government crop report, analysts said. The benchmark July cotton contract slipped 0.51 cent to conclude at 80.53 cents per lb, trading from 80.50 to 81.90 cents. Volume traded in the July contract stood at 7,742 lots at 2:31 pm EDT (1831 GMT). New-crop December shed 0.10 cent to end at 76.30 cents, ranging from 76.05 to 76.67 cents.