Cotton prices tended firm owing to primarily world trend and ginners holding back stocks on perception TCP swill exhaust but the corporation signalled it had enough time to linger on during the week ended on June 25, 2005. The spot rate was unchanged at Rs 2275.
WORLD SCENARIO:
Hot and dry weather impacted trading which kept major players on watch whether foul weather in Texas would turn out to be supportive to the futures. Later trade sales and speculative profit taking crept in hitting futures lower. The July opened at 48.16 and October at 51.20 cents a pound. On Monday futures vaulted to strong finish on speculative fund buying and news that weather in the key growing state-Texas will be hot and dry, supportive to futures. Besides this market took note of switch trade as players transferred their long positions out of July.
The next day's trading was similar. It closed higher on speculative buying with players completing the last minute transfer of positions out of spot July before delivery begun at the end of the ongoing week. Traders said the market has come back because "it got very over sold" and the recent action in the trading pit appears to have priced in all bearish factors for the market. The futures tended lower on Wednesday as trade sales and speculative profit taking scupper the market's three days advance while analysts observed that it may now be time for fibre contracts to consolidate.
Traders said early speculative fund buying lifted cotton to its highs, but trade accounts capped the market and when speculators, saw the market could advance no further, they dumped futures. The futures turned sharply higher on Thursday as investors completed the last minute transfer of their positions out of the July contract before it goes into delivery on Friday.
Dealings in the market were quiet for the most part, with some in the trade fretting at the furious rally in crude prices which could dent cotton demand if the world's economies plunge into recession. Meanwhile reaction to USDA's weekly export sales data was muted. On Friday futures registered fresh gains (six-week high) on speculative fund buying and concern over possible hot and dry weather in several cotton producing countries next week.
Analysts said cotton market players were turning their attention to growing conditions in the US and China, latter is feared could hit farms along with those in S.W. United States. Another traders said that China may import 13.5 to 14.5 million bales. The July futures closed at 50.13 and October at 53.15 cent a pound.
LOCAL TRADING:
Cotton prices maintained firm outlook as both the corporation and ginners held identical perception to delay sales until ripe time to ensure positive yield. The spot rate was therefore seen unbudged for signalling that market was not likely to be subjugated for whimsical perception. However, TCP said it had time to force ginners to liquidate stocks so that undue advantage was resisted. The spot rate opened unchanged at Rs 2275 just to show market had shrugged weakness.
The ginners had manageable stocks and fresh arrival would be well-managed. For reason or without buyers of cotton waited the TCP would soon come under pressure and lower rate. But corporation had its own calculation to decide when and at what amount to market their cotton. The new crop has still 1 1/2 months to come and TCP had no reason to hurry up.
The market was inactive on Tuesday as buyers expecting ginners would come to their term had not declared whether prices were coming down. In the meantime it gave satisfaction to learn from growers that sowing had almost completed in Sindh, Punjab and Balochistan. Weather was fine and target around 16 million bales was achievable. The ginners were watching world rate movement and were applying the impact futures could help or otherwise local but TCP was not in a hurry.
It wanted ginners should liquidate stocks so that they could not exploit later being sole disposer and pay growers due. On Thursday major players eagerly waited for the next week's TCP auction. For quality reason and press ginners to lower bint price, the spinners were carrying on cotton some lots. Spot maintained rate at Rs 2275.
The ginners meanwhile keeping stocks back to enjoy better return. China has announced it has a shortfall in cotton production but buying will start after positive talks with the US. Friday session was lack luster as trading was held captive by TCP auction shortly. Spot rate was unchanged at Rs 2275.On Saturday buyers kept to sidelines and spot rate remained unchanged:
SUBSIDIES MUST END:
Will it ever be so! Voice of truth has once again been resounding along loophole hunting to only mitigate the impact rather than eliminating the cause- two subsidies to cotton growers of the US. The voice of truth has come from the activist group Oxfam America the other day which keeping in tradition has warned that in order to comply fully with international obligations US must completely eliminate the Step 2 programme and the export credit guarantees for cotton and other unscheduled agriculture products.
Oxfam America's president has written a letter to Bush and all important Congressional leaders. An interested circle of experts here who went through the agency report expressed a word or two to remind the readers that the move has remained stuck up right through the four decades rich and poor nations have tried to dress up WTO wholesomely.
But the issue of subsidies has not been seriously taken up once, what to speak of any universally accepted rule or law. In the meantime weaker nations have been taken away the earning and supplementing member of aging father and widow mother.
The issue of environment surrounding the health of the magnitude has if not been solved, it is well-known who is the cause, sources reminded. They just by the way mentioned the amount of subsidy and the rich nations dole out to the poor world over. The report said that cotton exports have zoomed from a low of 4.34 million bales out of 13.92 million picked in 1998 to a projected 15 million bales, or three fourth of the crop that could total 19.5 million bales this year, bales weigh 480 lbs or 218 kgs each.
The consumption has shrunk from 10 million bales, while latest forecast is at 5.8 million in 2005/06. The rise in production figure and shrinking cotton consumption in the US have much for people with rich perception of their own.
MYANMAR HAS NO PROBLEM:
Oh! WTO, what ails you bringeth with the cherished globalisation of trade? The African countries quantity of cotton doing well, before WTO surrendered at the advent of WTO became a certainty. In Asia, Sri Lanka and Bangladesh are getting ready to suffer. There are other voiceless people in some countries, who have forsaken the world to reach their pangs.
Besides, other smaller African countries, Kenya was first to fill the air with laments that over 100,000 workers earning their livelihood from textile exports will lose jobs. Debate and discussion on government level has been on how to help the uprooted ones. In Asia, Pushpa Gamage of Sri Lanka and Shafin Begum of Bangladesh said that hundreds of clothing factories have closed or slashed jobs.
The time has changed from MFA to WTO . China can afford what others cannot explained one victim: While it costs around 1.84 dollar to make a short sleeved men's shirt in BD, China offers for a dollar or even less. The condition was in view of sponsor, who held back China from becoming WTO member only in 2001 and on condition that it won't devastate the existing manufactures in respective countries.
But China exported full throttle its textile products breaking the accord and faced penal action from America and milder action from the EU. It hears nothing very strange that countries registered loss of business and jobs, Myanmar reported satisfactory exports to country not known to perhaps the big textile exporter - to Latin America.
The countries cutting sorry figure including Pakistan, knowledgeable circles said are those who basically want investment to come from shaky governments and world donors.
If Pakistan textile exports have registered 20 pc or so rise it must thank China for the pace and prospect it offered by restraining its exports under pressure from the US and the EU. Pak cotton is next to no one, and if country made contamination free cotton it can beat anyone. But - sorry - wait until China makes its reentry one day in EU and US, normal way.
UNCERTAINTY IS NO MORE:
The uncertainty is what China abhors. Once it is gone, all other problems are easily surmountable. This is what VP of China National Textile Import and export crop, said in plain words. "Over the past week, our orders have recovered quickly. Besides, the price is also on the rise." The uncertainty had blurred China's business vision only in April/May and now, within weeks, the future flow is above board.
The Chinese exports suffered for a short while, as it waited to read the mind of the US and the EU. Since America took the stand of the accord China had signed, as condition to enter the WTO Caucus, capped the imports. But the European Union, did not has ten to seal the matter, rather it kept the door open for negotiation and understanding.
The result was that a term was reached "quickly" rubbing out all uncertainty and business flow was hurdle free now onwards. Hard working Chinese people (authorities) with an eye on the mouths it had to feed, takes no time in diversifying the trade as per dictates of circumstances. Unlike exporters of certain countries, who get confused more than partners in trade and ridicule the simple solution.
Since the uncertainty was created at the advent of the WTO, China was trying for solution that could work. The very first thing it tried and announced was that it will tax the products to make them unacceptable. But it was not acceptable rather the EU and US wanted that self-quantitative restrain be announced. In the meantime, the UE offered talks which yielded in understanding China agreed to limit annual growth in exports of various categories of textiles to the EU to between eight and 12.5 percent.
Meanwhile China is still trying to smoothen up things with the US, but the question sources ask whether textile imports into America is the only problem? Or yuan, shoes and steel products too are road blocks?
TAIL PIECE: The PCGA has given to threats often that FSC will be moved to seek its verdict, whether the ground made by the Cabinet Division, Commerce Ministry and the KCA to prove that it does not come in conflict with the Islamic injunctions. The KCA framed bye-laws 45, 83, 134, 142, 143, 144 and 147 inter alia were against the basic concept of justice and injunctions.
Of Islamic equality, fair play. The above KCA by laws 2002 relate to hedge marketing alias "Satta" business. The PCGA prayed that the above and other relevant by laws of KCA repugnant of provision of Quran and Sunnah and hence void and ineffective law and practice.
Comments
Comments are closed.