India’s fresh move may ease panic-like situation on cotton market

India’s latest decision may ease pressure on the supply side and cotton prices may not fluctuate sharply in short term as rates were firm amid local mills’ and exporters’ routine cotton buying on Friday, dealers said.

The official spot rate was unchanged at Rs 5,300, they said.

Prices of seedcotton in Sindh were at Rs 1900-2300 and in the Punjab at Rs 2000-2650, they said.In ready dealings over 5000 bales of cotton changed hands at Rs 3700-5700, they added.

Explaining the development in the local cotton trade, Naseem Usman said that in fact local cotton business is facing tough time mainly because of world recession, now the next direction of market will emerge after the Indian move.

He also said that in the short-run, cotton rates are likely to stay steady as most of the ginners may not lower the asking prices.Other experts said that generally, there is some dullness in the market, if business activities revive world-wide, naturally there would be visible and positive development in the local cotton business in the coming days.

According to the Reuters India’s commerce ministry said that it would allow cotton cleared by customs before March 4 to be exported, easing a controversial blanket ban the world’s second largest producer had imposed this week and which had boosted global prices.India unexpectedly banned exports on Monday to ensure adequate supplies for the domestic textile industry in the face of strong demand from its biggest customer China.

In the meantime, China’s cotton industry association has criticised India’s move to ban cotton exports, saying it was ‘irresponsible’ and would disrupt the global market.On Thursday the NY cotton futures finished lower for the third straight session as traders and players waited for a meeting of government ministers in India to resolve the country’s ban on cotton exports which has roiled fibre contracts, analysts said.

The benchmark May contract on ICE Futures US declined 0.56 cent to finish at 89.56 cents per lb, moving from 89.30 to 90.93 cents.

Cotton prices have more than halved since hitting $2.27 a lb on March 7, 2011, as demand shrank and world-wide sowings rose.The following deals were reported: 200 bales of cotton from Shah Pur Chakar sold at Rs 3700, 400 bales of cotton from Shahdad Pur at Rs 4400, 400 bales of cotton from Saleh Pat at Rs 5400, 600 bales of cotton from Khan Pur Mahar at Rs 5600, 400 bales of cotton from Haroonabad at Rs 5150, 200 bales of cotton from Bahawal Nagar at Rs 5200, 200 bales of cotton from Dunia Pur at Rs 5275, 600 bales from Lodhran at Rs 5400-5600, 400 bales of cotton from Bahawal Pur at Rs 5450, 400 bales from Kabbir Wala at Rs 5600, 400 bales from Khanewal at Rs 5600, 200 bales from Mailsi at Rs 5700 and 600 bales from Mian Wali at Rs 5700.

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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.<br/><br/>KHI.<br/><br/>As   Ex-Karachi
on 08.03.2012
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37.324 Kgs         5,300      130        5,430         5,430            NIL
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Equivalent
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40 Kgs             5,680      130        5,810         5,810            NIL
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Copyright Business Recorder, 2012