The official grade III cotton rate moved generally along the New York values while pest attack reports also weighed though prices in ready maintained above Rs 50 to Rs 100, this was the observance of the relevant sources during the week ended on September 11, 2004.
Official rate started down Rs 25 to Rs 2350 but fluctuated and was last seen at Rs 2275 on Friday.
WORLD SCENARIO: The futures in NY trading mixed despite heavy fluctuations either way and on Monday being a closed day on account of Labour Day. Long holidays blocked cotton trading on Monday.
That meant session on New York started on Tuesday, where cotton futures bounced from the limit down losses to a higher close, as concerns grew over Hurricane Ivan aftermath of Tropical storm Frances which hit cotton crops in South-East over the week-end.
On Wednesday futures extended their bounce to close higher as concerns over Ivan continued to busy the market. Analysts put damages to crops from Frances at 200,000 bales.
However, the US crop likely will be near a record this year the analysts forecast ahead of Friday's USDA supply/demand reports due to generally favourable weather in cotton belt this summer.
Reuters agency was responded by analysts that on average they expected the harvest in 2004-05 to reach 19.9125 million (480 lbs) bales. Brokers pegged resistance in December cotton at 53.75 cents and 54.30 cents with support at 52.20 cents and 51 cents.
The next day cotton retreated on positioning and options activity before USDA supply/demand report and planned late market opening. Players were also eyeing on Hurricane Ivan in the Caribbean but brokers saw US Southeast cotton growing areas as in less jeopardy from monster storm which was on track to hit Florida by early next week.
The New York Board of Trade has set special hours for Friday to commemorate the third anniversary of September 11, 2001 attacks on the World Trade Centre.
Week end's New York cotton futures weakened as traders digested bearish USDA data which it said hit a record 20.90 million (480 lbs) bales. The estimate is above peak harvest of 20.3 million bales in 2001-02.
Analysts predict Hurricane damage would be around 200,000 bales. The cotton closed at 51.25 and December at 50.72 cents a pound.
LOCAL SCENARIO: The local cotton market moved in usual sluggish way, manifesting caution on both sellers and buyers. Right now reports indicates production is expected slightly above or below 11 million bales.
That is ginners are not prepared to sort of panic selling lest tomorrow such situation developed which could help price go up.
Similarly, spinners are confident on the back of nearly 2.3 million bales imported cotton and bumper crop ahead.
They calculate the prices are bound to go down. The result was that the day one saw cut by Rs 25 to Rs 2325 without Rs 50 up country expenses. However, the spinners turned back towards market and hoped prices to be lowered further.
On the other hand the ginners took support from New York rates where a series of hurricanes were keeping cotton growers apprehensive.
Prices depicted firmness in the ready off takes, always much above official touchstone rate.
On Tuesday sharp cut was noted by Rs 75 to Rs 2250 but ready stock were sold above Rs 2250 and Rs 2300. Ginners, having relieved of the disturbing idea, that old crop won't buy any one but the TCP under govt instruction.
They have to consider current crop prices to ensure that they remain alluring for the spinners. Even on Wednesday asking prices remained above Rs 100 from the spot rate with merely two bales sold.
The news about world production on the higher side, spinners stayed mostly on the sideline. The spot rate remarked at Rs 2250.
On Thursday, some 3000 bales changed hands. The slight revision in the official rate made spinners apprehensive. But overall glut hold spinners firm to be calculative.
On Friday spot rate was unchanged at Rs 2275 and about half a dozen deals were struck, almost all above the official rate on Saturday, in ready business trading was seen at Rs 2275 and Rs 2300 modest activity. While spot rate remained unchanged.
GSP: A WINDFALL: Pak exporters to EU were unaware of a good news was in store for them. The exporters had taken for granted they had lost automatically but the EU has recently taken a decision that the GSP scheme will continue for another one year and will be effective from 2006.
GAINS: The 11 percent duty that exporters to EU had to pay to that country will not be effective after January 1, 2005. What is pleasing yet is that EU has sought views and limits from the poor countries including Pakistan to help them get maximum benefit from international trade.
The principles adopted by EU would be valid up to next 10 years. The Pak exporters hasten to formulate strategy for meeting with the chairman EU commission to convince him that Pakistan cannot compete under the circumstances from the more resourceful countries like China and India, Bangladesh is no less a threat for it being granted LDC status.
However, what strategy has been evolved to extract some facilities in declaration of failure to equip itself during the 58 years. Exporters had no better ground than to cite two neighbouring countries which have worthily equipped themselves to be as self-sufficient as possible.
Since the two countries have much advanced technology and can met the challenges following any pitfalls. The top reason why should Pakistan exporters be a privileged country under the principles (GSP) is that Pakistan has been front country in fight against terrorism and drug trafficking.
Pakistan is also likely to cite it has remained isolated from accords between countries. Pakistan has depended too much on friends. They have survived on production of low cost production for low investment. If God had not granted in its finite mercy, it was doubtful anybody would have invested in products to earn 8 billion dollar every year without any increases.
According to reports when hammer of WTO was to strike over head some investment have been brought forward. But it is not clear so far how much have sunk in production of value added goods.
Only these can ensure respectable export earning certainly much higher than 8 billion dollar or even latest target at 13.1 billion dollar.
TEXTILE MINISTRY: Stone-dead silence had for sometime observed in these columns that a textile ministry is like textile sector itself which cannot bear export earning more than 8 billion dollar annually or even less. But it was also to be the credit of this regime to set up a textile ministry as a number of other new things. Or was it government waiting for textiles to earn more then 8 billion dollar(60 percent of it) to be the ripe time to assign sector a long outstanding demand.
Pakistan is apt in watching what neighbour have, but it was never come to light to enlightened authorities to provide one ministry as India, Sri Lanka and Bangladesh all have already been enjoying and may be gaining from their existence. Its existence is being celebrated what is due.
While celebrating it has been rightly mentioned that textile ministry would help (financially) to set up or improve existing research organisation by textile associations.
Such a department or institution is a priority all over the world but in this country. In a recent buzz over the textile ministry and research organisation some one whispered. Oh, well, some textile bodies indeed have RD research department. But the man well entrenched into textile world failed to confirm the man doing the research work was any trained person and expert or relative of some elite.
The ministry will help develop relation between the industry and the govt. Well, who will take care of cotton farmers and ginners. The observers were confused it growers would be baby of agriculture and food ministry thrashing differences out will be difficult. And hence a cotton ministry is desirable as a separate entity. It is to be seen how long will take this to come?
SINDH TARGET: Sindh target is achievable, as so far the conditions are ideal to produce 2.2 million bales. The authorities are quite upbeat about 11 million bales production 2004-05 season.
Punjab is set to produce 8.5 million bales. It is good that Prime Minister Shaukat Aziz will review the cotton situation and most probably be briefed cotton production will be more or less 10.7 million bales. And, the PM will be satisfied to the core. To be upbeat is nothing new as is seen in the official circles.
They have to be optimistic and seen economy flourishing and govt thriving. But there are other interests too. Such as farmers and cotton growers who have little sleep till the crop is harvested and gains reach their hands. Whispers have started from some quarter who are shy of specifying the area and how intense is the attack.
All this sort of thing needs emergency who should give correct estimate and change instance on its own survey and studies rather listening to certain interests.
TAIL PIECE: The 2004-05 crop as lying in the ginneries, ginners praying TCP to come and pay. The cotton price situation is so volatile can't be predicted. The TCP has secured Rs 500 million. So used to the Pakistan Export Corporation and ultimately and up in huge loss.
The money TCP has secured from wherever will have to pay back, market sources said adding that money is no one's but the taxpayers'.
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