Prices turn soft； spot rate slashed by Rs 100 as demand slows down on cotton market

Official spot rates were slashed on the cotton market on Wednesday as mills and spinners did not show any interest in fresh purchasing, dealers said. The Karachi Cotton Association (KCA) official spot rate was lowered by Rs 100 to Rs 8,500, they said. Prices of new Phutti came down by Rs 100 in both Sindh and Punjab to Rs 3,700 and Rs 3,800, they said.

In ready business, approximately, 1000 bales of cotton changed hands between Rs 8400-8700, they added. Market sources said that the bullish trend in the NY cotton market did not influence the local buyers as they kept on the sidelines mainly because of dullness these days.

They also said that no business in cotton yarn is a big concern among the traders and it is expected that good production news may not help in stabilising the rates in the coming days. Other traders said that prevailing condition is very much confusing because on the one hand, production is good but on the other hand, sellers are not active to the new deals mainly because of world financial condition, they said.

Some experts said that if demand rises , the ginners may increase the asking prices because the growers showing reluctance in selling due to high cost of production. On Tuesday the US cotton futures settled mixed as players sought to unwind positions in the spot contract before it goes into the delivery period at the end of the week, analysts said.

The spot July contract climbed on buying by players who needed to cover short positions given the thin supply of deliverable cotton available. They then turned around and sold the new-crop December contract. The key December cotton contract on ICE Futures US slipped 0.07 cent to end at $1.24 per lb, ranging from $1.2324 to $1.2772.

Spot July increased the six cent daily limit to finish at $1.5473. Total volume traded reached nearly 14,700 lots at 2:50 pm EDT (1850 GMT), a quarter below the 30-day norm, Thomson Reuters preliminary data showed. The following deals were reported: 200 bales of cotton from Ahmed Pur at Rs 8,500, same figure from Faqeer Wali at Rs 8400, equal number from Rajan Pur at Rs 8,400, same figure from Sadiqabad at Rs 8500 and equal number from same station at Rs 8700, they said.