Prices further down on cotton market amid modest business

May 18, 2013

Cotton Market
Cotton Market

Easier trend persisted on the cotton market on Friday as leading millers and exporters kept on the sideline in the process of sluggish business activity, dealers said. The official spot rate continued fall, losing more Rs 100 to Rs 6,300 due to less buying interest among traders, they said.

In the ready business, activity picked up slightly as nearly 2,000 bales of cotton traded between Rs 5,800-6,100, dealers said. Cotton analyst, Naweem Usman, who just came from India after a short visit, said India was also facing dullness in the cotton trading but he hoped that activity would improve as the government of both countries adopted business friendly policies to revive ailing economies, particularly in Pakistan, where economic condition is not in a good condition, must avoid issuing notifications and different types of taxes.

All these are adding factors to slowdown economy, he said. After, election 2013, the participants are still reluctant in making new deals on the local cotton market, and buyers were not interest in the business, he observed. Naseem Usman said that ginners were interested in selling even at lower rates, but in the absences of buying interest, the exporters and millers were on the sidelines, most probably waiting for further decline in the rates. He said trading activity might revive as China started buying of row cotton. The ginners had large stock of unsold stock of yarn were under pressure because of persisting dullness in the market, other brokers said.

Naseem Usman said power and gas crisis in the country was bringing the wheels of industry to a halt, if the new government managed to overcome the present major problems, particularly related to the textile sector, then foreign reserves likely to go up with steadier pace. He said “we have good news that the dry and hot weather is having good impact so this factor is brightened the prospects of early maturity of cotton crop especially in lower Sindh, where cotton sowing stared much earlier, besides cotton production might achieve desired target, he added.

He appreciated business friendly attitude of Indian cotton businessmen and prayed for progress in Sino-Pak relationship. According to the Reuters, the NY cotton futures slipped on Thursday in light trading volume, under pressure from producer selling, weakening commodity markets and US weekly export data seen as mixed, dealers said.

The most-active July cotton contract on ICE Futures US fell 0.42 cent, or 0.5 percent, to settle at 86.03 cents per pound, after mixed trading throughout the session. Cotton felt pressure from other falling commodities markets as the Thomson Reuters-Jefferies CRB, a benchmark for global commodities, edged down on losses in agricultural markets and in gold, and US financial markets were little changed. The following deals were report: 800 bales of cotton from Burewala at Rs 5,800, 200 bales from Bahawalpur at Rs 6,000, 409 bales of cotton from Garah Mor at Rs 6,100 and 400 bales from Pul Bagar at same rate, they said.

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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-Karachion 16.05.2013
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37.324 Kgs         6,300      155         6,455       6,555            -100
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Equivalent
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40 Kgs             6,752      155         6,907       7,014            -107
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Courtesy BR

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