Active mills buying pushes up prices； spot rate raised to Rs 10,000 on cotton market

KARACHI  (January 21, 2011) : Prices went higher on the cotton market on Thursday as mills continued buying on perception that rates would maintain upward march due to short crop, dealers said. The Karachi Cotton Association (KCA) spot rate hit the record high after gaining Rs 100 to Rs 10,000, they said.

Phutti prices are not available as ginners have stopped buying the commodity from the growers, they said. In ready business, prices are heading to cross the all-time high level at Rs 11,000. Activity was good because of strong demand by mills, so, approximately 13000 bales of cotton changed hand between Rs 9,650-10,600, they said.

Commenting on the bullish price trend some analysts said that for the first time in the history of country, the traders of grain and commodity, including cotton stopped business against the levy of 3.5 percent withholding tax on agriculture product, which is not acceptable to the traders.

It is expected that the situation may ease after the Pakistan Cotton Ginners Association (PCGA) discussions with the finance minister, they said adding that a meeting of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) will be held on Saturday in Karachi. PCGA is also invited to discuss the present issue with the finance minister Abdul Hafees Sheikh.

The ginners who have not enough unsold stock are trying to sell the stuff at the asking prices, in the meantime, the mills unwillingly, continue buying amid rising perceptions that prices may go up in the coming days. Short supply caused high rates and also created some confusions among the cotton trader. Some are facing financial problem and others are reluctant in pouring their investment in that business, which may be lost due to non-availability of basic needs, i.e. gas and power.

Earlier it was expected that the country would get the target of 11.7 million bales of cotton for the current season but now it is most likely that nearly 11.5 million bales of cotton could be achieved after the devastating floods in country, they said.

On Wednesday the US cotton futures finished higher on investor and speculative buying inspired in part by a weak dollar, dealers said. Fiber contracts also seemingly tracked the early strength and late weakness of grains prices as players awaited a US government report on cotton export sales, they said. The key March cotton contract on ICE Futures US climbed 3.50 cents to settle at $1.4894 per lb, dealing from $1.4776 to up its 5.00-cent limit at $1.5044. Trading volume of around 22,200 lots was about 15 percent above the 30-day norm, Thomson Reuters preliminary data showed.

The following deals were reported: 400 bales of cotton from Mir Pur Khas sold at Rs 9650, 1200 bales of cotton from Kotri at Rs 9800, 400 bales of cotton from Sakrand at Rs 9800, 1200 bales of cotton from Nawabshah at Rs 9800-9975, 400 bales of cotton from Tando Adam at Rs 10000, 400 bales of cotton from Ghotki at Rs 10200, 400 bales of cotton from Chichawatni at Rs 9700, 800 bales of cotton from Haroonabad at Rs 9700-9800, 400 bales of cotton from Layyah at Rs 10000, 400 bales of cotton from Tounsa Sharif at Rs 10000, 1000 bales of cotton from Rahim Yar Khan at Rs 10000, 400 bales of cotton from Rajan Pur at Rs 10000, 1000 bales of cotton from Khanewal at Rs 10000, 400 bales of cotton from Faqirwali at Rs 10000, 800 bales of cotton from Mian Wali at Rs 10100-10200, 200 bales of cotton from Baserah at Rs 10200, 400 bales of cotton from Rajan Pur at Rs 10200, 600 bales of cotton from Sadiqabad at Rs 10400-10500, 400 bales of cotton from Ali Pur at Rs 10500, 1000 bales of cotton from Gaggo Mandi at Rs 10500 and 1000 bales of cotton from Khan Pur (Credit) at Rs 10600.