Mills' active demands help prices to remain firm on cotton market

Increased demand by mills aided the prices to resist further decline on the cotton market on Wednesday, dealers said.

The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 5,300, they said.

Prices of seedcotton in Sindh were at Rs 1800-2300 and in Punjab at Rs 2000-2600, they said.

In ready dealings above 30,000 bales of cotton changed hands at Rs 3,800-5,500, they added.

Some brokers said that mills were active to cover their needs to meet the export obligations in the absence of basic indicators.

To boost exports in the competitive market as the importing countries have not much purchasing power due to world recession, recently, India, Bangladesh and Sri Lanka depreciated their currencies to get the desired purpose, analysts said.

Whereas a report appeared that about four million dollars worth textile export orders for Christmas sales destined to the Europe and the USA are going to be defaulted due to three days a week gas shutdown and phenomenal increase in prices of electricity, gas and petroleum products.

In Pakistan the national currency is depreciating but it looks that the country may not get the textile export target in the absence of basic needs, they added.

According to a report, Chinese cotton importers are refraining from booking shipments before April because of uncertainty over the timing and volume of sliding-tariff quotas for 2012, according to a report on an industry web site on Wednesday.

China's cotton traders also are unlikely to book big volumes for January and February shipments since most small- to medium-sized companies are waiting for the sliding-tariff quotas, according to the report on www.cncotton.com, a website operated by the China National Cotton Reserves Corp.

China's Zhengzhou Commodity Exchange said on Wednesday it will cut the trading margin and daily trading limits for cotton futures traded on the bourse starting from Friday's settlement.

The trading margin for cotton futures contracts will be reduced to 10 percent from the current 12 percent, while the limit-up and limit-down will be cut to 6 percent from the current 7 percent, said the exchange in a statement published on its web site.

On Tuesday the NY cotton futures settled higher on investor short-covering as the market rebounded from an early fall to a 15-month low, and analysts said the market should consolidate in the days ahead, Reuters said.

The key March cotton futures rose 1.40 cents, or 1.5 percent, to end at 92.75 cents per lb, near the top end of its 88.50 to 92.94 cents band.

It was reported that the session low in March of 88.50 cents is the lowest intra-day level for cotton's second position contract since the start of September 2010, Thomson Reuters data showed.

Total volume traded on Tuesday was over 17,600 lots, a quarter under the 30-day norm, preliminary Thomson Reuters data showed.