Cotton spot rate at record high of Rs10,600 per maund

KARACHI: Spot rate of average-quality lint hit an all-time high of Rs10,600 per maund on Tuesday because of tight supply of the commodity in the local and international markets, dealers said.
Spot rate of the Karachi Cotton Association (KCA) skyrocketed by Rs500 to strike a record high of Rs10,600 per maund for average-quality lint, surpassing the previous record high of Rs10,500 per maund on November 10, 2010.
About 3,000-4,000 bales of raw cotton were sold at the highest level of Rs12,000 per maund on three-month credit in the country.
Raw cotton for March and May contracts surged by 4 cents each to touch an all-time high of $1.61 and $1.56 per pound, respectively, at the International Commodity Exchange (ICE), New York, due to brisk trading activity, while boosting appetite for the commodity.
“Ginned cotton touched a record high amid short supply in the local market and continuous rise at the ICE, while pushing cotton imports up,” said Naseem Usman, chairman of the Karachi Cotton Brokers Forum.
The country’s textile sector consumes around 16 million bales every year and this year it needs to import around four million bales across the world due to floods, which damaged around two million bales. Experts expected that the total output of cotton would reach 12 million bales by the end of the season 2010/11 due to the use of BT cottonseed in the country.
He said China will observe a week’s holiday in February, therefore, mill-owners have been lifting raw cotton in bulk from the international market.
“Local cotton prices may edge higher in the days to come following a rising trend at the ICE, but domestic raw cotton prices will fall soon and cotton prices will remain stable in the range of Rs10,500 and Rs11,000 per maund in the open market,” said Shakeel Ahmad, a leading cotton trader at the Karachi Cotton Exchange (KCE).
Moreover, Punjab grain markets remained closed for over a week in protest against imposition of 3.5 percent withholding tax on all farm commodities.
Traders said the Federal Board of Revenue (FBR) chairman would hold a meeting with members of the Pakistan Cotton Ginners’ Association (PCGA) to resolve the problem on Wednesday in Islamabad.
Despite record high prices of the commodity, the country’s cotton sales rose to 16,200 bales of raw cotton (170kg each), including 1,000 bales from Khairpur; 400 bales each from Mirpur Mathelo, Salehpat, Deharki, Rohri and Ghotki; 200 bales from Tando Adam; 800 bales from Ghotki; 1,600 bales in mill-to-mill deals, varying in the range of Rs10,500 and Rs11,800 per maund and another 800 bales each from Haroonabad, Shujabad, Alipur, Mianwali and Duniapur; 400 bales from Kehror Pakka, Layyah, Shah Jamal and Bahawalpur; 1,400 bales from Rajanpur; 1,600 bales from Dera Ghazi Khan; 200 bales from Shahdan Lund; and 1,800 bales in mill-to-mill deals, ranging in between Rs10,400 and Rs11,000 per maund.

(Source: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=27615&Cat=3)