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Continued fall in new york cotton futures, china market drag down spot rate

Continued fall in new york cotton futures, china market drag down spot rate Source: www.chinatexnet.com
Date: 06-06-2012
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Persisting decline in NY and China cotton futures pushed the spot rate lower by Rs 100 on the local cotton market on Monday, dealers said. Official spot rate drifted lower by Rs 100 to Rs 5,500, they added. In ready business, only one deal reported as 899 bales of cotton changed hands from Ali Pur at Rs 5700, they said.

First session after the budget announcement was nearly listless as only one deals reported because of lack of buying interest, analysts said. They said that trading activity slowed down followed by reports of decline in the NY and Chinese cotton market.

China, who is third in production as good consumer, facing a heap of unsold cotton stock, resulting prices dropped more by four percent on broad-based selling, they said. Not only local market, China, India and Bangladesh all have unsold stock, causing huge losses due to moribund economy of Spain, Greek and Turkey, unemployment and rising debt issues are increasing most parts of the world, they said.

The other major reason is higher crop projection and lack of buying interest among leading importers of lint, notably China and some other countries. Locally, we can expect that prices may halt new erosion after decline and in the NY market, as well, the NY cotton has hit low at 68cents per lb from 2.27 dollars per lb some times ago, they said.

According to a report, China's cotton futures slid nearly 4 percent to over two-year lows on Monday amid a broad-based sell-off in commodities as investors slashed positions in risky assets after weak US jobs data underscored concerns about the struggling global economy. The most-active January Zhengzhou cotton contract fell as low as 18,670 yuan a tonne, its lowest since September 2010. By 0223 GMT, it was down 3.5 percent at 18,740 yuan.
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