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KARACHI (June 06 2010): Both the mills and ginners kept on the sidelines on the cotton market on Saturday on expectations of incentives in the budget announcement, dealers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 6,400. In the ready business, no deal finalised during the day, they said.
No activity was seen on the day of budget announcement as both the mills and ginners were waiting for the details of measures, expected in the budget (2010-11). As usual the ginenrs and growers were expecting some incentives to boost output of farm commodities, wheat, rice besides, cotton, they added. On the other hand, the mills and spinners were expecting some positive news about the 15 percent yarn export Regulatory Duty and export quota ceiling, they observed.
Some cotton analysts said that textile sector was expected to get some relief to give some compensation to cover losses on the export front after yarn duty. This year, it is interesting to note that not a single minister called the budget as business friendly budget, thanks to them, may be they forgot it because of their engagement in the several development works for the nation, they said.
On Friday the US cotton futures closed substantially lower after commodities and US equities got a heavy beating following a tepid US employment report, brokers said. Brushing aside the US Department of Agriculture's glowing weekly export sales figures, investors referred instead to the likelihood of slower economic growth than previously thought portrayed by the jobs data to unload cotton futures.
Key July cotton contracts on ICE Futures slid to a close 1.15 cents, or 1.47 percent, lower at 77.06 cents per lb, but not before falling to its lowest level since February 18 at 76.56 cents a lb. July volume was heavy at 16,993 contracts. Meanwhile, December open interest surpassed that of July for the first time, as some players continued to roll out of July futures and into the later-dated contracts and others liquidated July positions outright, brokers said.
December cotton lost 1.12 cent, or 1.47 percent, to end at 75.28 cents a lb, on higher volume of 8,932 lots. The contract fell to 74.77 cents, a low dating back to March 31.
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