Negotiations about the cotton exports to South Asian and tsunami-hit states have boosted the prices in the local market last week, relevant sources said. Persistent rise in the cotton demand by the buyers pushed the prices at Rs 2175 in the ready business and there were higher anticipations that the price might touch the new high at Rs 2200, market sources said.
As a result, the official spot rate followed suit and picked up Rs 50 to Rs 2075 during the week ended on January 15, 2005, sources said.
WORLD SCENARIO: Players keenly watched USDA monthly supply and demand estimates and exports sales data yet to come for scenario turn for better. However, March contract opened and closed at 47.24 and 46.17 while May opened at 48.13 and closed at 47.23 cents a pound.
The futures on the first day finished near a 3-month peak on fund and technical buying although, producer and merchant sales sought to cap the market robust gains.
Analysts said the markets surge has been underpinned by suspected buying from foreign mills particularly those from China. On Tuesday futures ended with losses on speculative profit-taking as the market pulled back from the 3 months highs, with players now bracing for release of a key government report shortly.
Optimist traders said money was taken off of the label. We are certainly due for a break we have been up five days in a row. Analysts said they feel the forecast for world cotton output may rise to near 115 million (480 lbs) bales, from the 114.02 million bales pegged by the government some days back.
On the third trading day the futures ended mixed as speculative buying gave the nearly months a mild boosts with most of the trade giving short shift to a government production report.
Meanwhile, USDA has increased the monthly supply/demand estimates while trade turning to export sales data to lay hands on future direction. On Thursday sales by small speculators settled futures easier, although steady levels of consumer demand could eventually push the market higher in coming days.
Demand for cotton remained strong as USDA reported its sales hit 261,700 RBs-500 lb against trade belief it would range from 130,000 to 180,000 RBs, Friday's session saw futures mixed in activity featuring small speculators ahead of holiday - Martin Luther King Day - with analysts uncertain about market direction - small speculation but those some accounts covered their positions going into the close.
LOCAL TRADING: The ginners have been rejoicing turn for the better scenario owing to just set in quota free WTO regime bulging demand world over. They must express gratitude to Almighty Allah for sparing some countries, which are likely to import cotton.
However, the spot rate has been raised so the lint cotton asking prices in the ready. Nearly 10,000 bales are changing hands daily. The prices are likely to go up as TCP is still in the market on perception that picking will soon end or has already ended.
The Monday trading was brisk where 10,000 bales were done. The fact led to spot rate rise by Rs 25 to Rs 2025 without upcountry expenses. TCP presence is strengthening support on Tuesday trading dipped only slightly. The spot went up by another Rs 25 to Rs 2075.
Seed cotton was selling in Sindh at Rs 800 Rs 925 while the stuff was selling in Punjab at Rs 800/1100. The lint was in Sindh sold at Rs 1800/2100 whereas in Punjab it was available at Rs 1800/2195. That world will have record cotton production had no effect on the trading.
The spot went up by another Rs 25 to Rs 2100 Thursday's trading had slightly jolted on news that TCP may not sign new contracts. The impact was seen in spot rate, which stayed put after continuous gains. It was unchanged at Rs 2100. Buying also was subdued with around 5000 bales changing hands. The ready price ranged between Rs 2100 and lowest at Rs 1925.
Friday's session turned bearish, spot going down by Rs 25 to Rs 2075. The set back a must following virtual going back of the TCP from its commitment to continue until the end of the season. Besides, transportation of sacrificial animals was also impacting prices.
Only those buyers were on the market, who had means of transportation with them. However, phutti in Sindh was sold between Rs 800/930 and lint cotton 1775 and Rs 2025 and Punjab phutti changed hands at Rs 800/925 and cotton sold at Rs 1800 and Rs 2100.
More than 13000 bales were lifted by consumers taking low prices as from the sellers. Not a single deal reported on cotton market on Saturday partly because of transportation problem ahead of Eid holidays, dealers said.
INDO-PAK JOINT BID? The understanding reached between India and Pakistan to tackle textile resins jointly in international markets as supply welcome and needs to be carried forward. The WTO system may have been good but flanking challenges need to be tackled by the countries otherwise to let each other down.
No doubt, efforts have been continuing for some months past for co-operation for greater good of the two nations and people, but such immaculate result had not emerged. The Indian particularly were interested in selling textile machinery. Good quantities of chemicals and dyes have already been playing important rate. The new trade order has provoked countries likely to be a todds to snatch market share.
The Chinese have been also very much exploring Pak textile exporters to join hands on issues particularly going their own way. The effort, were in the direction to reach understanding so that need for cut-throat competition is avoided.
China has offered, and understandably a number of countries, most likely even India, has hired space to produce textile goods from there. Pakistan was offered space in that textile city the result has not been made public.
China in its ability to win market access and share has not been showing nervousness or such things but offering opportunity to work together and gain on equal facting. China was so much a threat much before it was allowed to join still to be on test time WTO and had to sign a document to assure that it will submit if it proved to be a threat to US textile business and even the European Union's.
The WTO has set in and is over a week old. Its working has not been very clear whether textile exporters are satisfied and find the hopes come true. But the countries who were expected to gain most like China and Pakistan have been subjected to review of dumping orders and indeed Pakistan is made victim of countervailing duty on shop towels.
Side issues apart of countries like China, India and Pakistan would do good to themselves to have some sort of understanding to avoid undue competition among one another to stay in textile business up right. India offer to work together very timely for challenges WTO offers to them and peace process so cautiously being processed to make it sustainable.
WTO'S FIRST VICTIM: Pakistan textile exporters were waiting to pour products into America or were US Commerce Department officials to pounce on alleged dumped they initiated proceedings in preparation to impose countervailing duty is difficult to lay hands on.
But one thing is clear the US action not unexpected or illegal but belittled the hope Third World exporters of textiles had pinned in WTO.
China and Bangladesh have also been chosen for what they call sunset reviews of dumping orders against shop towels from BD and China.
Incidentally only last week such a possibility was discussed when a Northern India Textile Mill Association was here on a visit to thrash out some issues and an agreement was reached.
The team chief had genuinely felt that after total elimination of quota curbs issues like anti-dumping duly subsidies will emerge. He had hinted Asian countries must adopt joint strategies to face challenges.
The challenge is there. It is probably too early to say whether such a probably was discussed ore strategy was evolved. Any way right now Pakistan is a lone fighter. BN's case is under review. China knows the ways to get rid of such charges.
Reports have just appeared in paper and exporters were not available to comment. But they must have been tightening their belts to fight and win the maiden case. The subsidy on agriculture, remains a privilege for richer nations when that will go in absolutely unclear.
But countervailing duty and anti-dumping duties have already shown their sharpened teeth. Pakistan if it is finally conveyed that countervailing duty has been imposed, it could be up to 30 percent. A vague picture of WTO what it would be like is here!
TAIL PIECE: Some day some one will examine the possibility of finding a permanent place of the TCP in support of prices that looked or really was unreasonably unfeasible. The TCP's role has been pruned for last couple of days. But why the process has been announced while it could by players taken as a pause.
No doubt prices of seed cotton and lint cotton has stabilised. The reason for announced "withdrawal" was to halt some interests who are allergic to rising trend. If tomorrow cotton is down beyond even meeting the investors cost then? Let TCP act on permanent basis and let it act on its own to stabilise price when they go astray!
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