Cotton prices continue soaring on rising demand

KARACHI  (November 11, 2010) : Cotton prices gained momentum on the back of speculations on the cotton market on Wednesday, dealers said. The Karachi Cotton Association (KCA) raised spot rate by Rs 500 to Rs 10500. Seeds cotton prices in Sindh and Punjab were higher by Rs 200 to Rs 4500-4700, they added.

In ready business nearly 52000 bales changed between Rs 10000-11000, they said. Bullish trend in the international market lifted prices further in the local market, dealers said adding that strong demand by China and continued rise in the NY cotton futures. Cotton prices flying like a bird and it looks that there is no limit, how much, nobody can predict. In Asian trade China's cotton futures surged to a record on Tuesday amid wide price swings as traders awaited the US Department of Agriculture's monthly global crop estimates later in the day and Chinese economic data this week.

China's cotton prices have skyrocketed in the last three months thanks to abundant liquidity and expectations that demand will outpace supply. On Wednesday the US and China cotton futures climbed to another record, with the latest push coming from a US government report, which raised China's import estimates and lowered global production forecast. US cotton is the top performing commodity on the Reuters Jefferies Commodity Index, having more than doubled in value this year, while China's Zhengzhou cotton futures have shown a similar trend. On Tuesday the US cotton futures ended at an all-time high, rising for the eighth day in a row due to relentless Chinese mill and investor buying and no sign the rally in the overbought market is slowing, analysts said.

Cotton rates, the top performing commodity on the Reuters Jefferies Commodity Index, having risen almost 95 percent in value year to date. A normal bull market would have higher highs and higher lows, but the US cotton market no longer resembles that, he said. The benchmark December cotton contract on ICE Futures US increased the 5.00 cent daily limit to finish at $1.5123 per lb, with the session low at $1.4727. Under exchange rules, the daily limit will rise to 6.00 cents on Wednesday.

The following deals were reported: 1200 bales of cotton from Rahimyar Khan and Tando Adam sold at Rs 11,000, 1000 bales of cotton from Sanghar sold at Rs 10000-10400, 2000 bales from Shahdad Pur at Rs 1020-10400, 2000 bales from Mir Pur Khas at Rs 10300/10400, 2000 bales from Tando Adam 10200-10400, 3600 Nawabshah at Rs 10300-10400, 3000 bales from Khair Pur 10300-10400, 6000 bales from Upper Sindh at Rs 10500, 200 bales from Kassowal at Rs 10200, 200 bales from Jhang at Rs 10300, 2000 bales from Khanewal at Rs 10000/10500, 2000 bales from Fort Abbas l1000-10500, 1200 bales from Liaquat Pur at Rs 10000-10500, 3000 bales from Rahim Yar Khan at Rs 10000-10500, 2000 bales from Sadiqabad at Rs 10000-10500, 2000 bales from Dera Ghazi Khan at Rs 10500, 1000 bales from Ali pur at Rs 10500, 600 bales from Hasil Pur at Rs 10500, 600 bales from Tounsa Sharif 10500, 1000 bales from Shadan Lund at Rs 10500, 4000 bales from Rajan Pur at Rs 10500, 600 bales from Gaggo Mandi at Rs 10500 and 400 bales from Khan Pur at Rs 10500.