Pakistan - Positive trend continues on cotton market due to supply shortage
Dated- 25 Jan , 2012 - Pakistan
The positive trend seen on Monday continued on Tuesday also on the cotton market, dealers said.
KCA raised the spot rate by another Rs 50 to Rs 5,800, they said.
Prices of the seed cotton in Sindh were at Rs 1990-2400 and in Punjab at Rs 2100-2800, reports said.
In ready dealings nearly 25,000 bales of cotton changed hand between Rs 4400-6100, dealers added.
As a result of cotton shortage in India, the Indian traders were buying the stuff from Pak exports, said market watchers.
This was the major factor behind the fresh rise in prices, they said.
On the other hand the ginners were not inclined to sell at the ruling prices, expecting further rise in days ahead.
New York cotton futures extended its gains to end at a five-day high on Monday as follow-through investor buying gave fiber contracts a lift, analysts said.
The key March cotton futures on ICE Futures US gained 0.77 cent to settle at 99.37 cents per lb, dealing from 98.06 to 99.44 cents.
The contract built on an uptrend that began at the 17-month low hit on December 14.
"It's holding in here like a rock.
The market continues to chew its way up to the near-term of $1.02," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
Cotton's strength was bolstered by news coming from China, the world's leading consumer of cotton for its textile and apparel industry.
Stevens said in a report that "the rate of China's GDP, robust retail sales and factory output plus expectations that China's planted acreage will fall next season all contributed to bullish attitudes." Volume traded on Monday reached almost 17,300 lots, over 15 percent above the 30-day norm, according to Thomson Reuters data.
Analysts said business may slow down this week as the Chinese celebrate their New Year.
Other technical resistance targets for the March cotton contract loom at 99.95 cents a lb, and then though the key $1 psychological level and then $1.02.
A close in the March contract below Tuesday's low of 95.67 cents would likely lead to further losses leading down to 94, then 91 cents, analysts said.
Cotton's open interest - an indicator of investor exposure - stood at 158,439 lots as of January 20 versus 157,614 lots on January 19, the exchange said,said Reuters.