Almost panic buying for obvious reasons by the cotton consumers was marked when over 100,000 bales changed hands during the post-Eid week under review, spot rate was pulled down by Rs 25 to Rs 2350.
WORLD SCENARIO:
Quite a few factors lead cotton futures in NY trading to dip sharply and indication was that hope for a better return was in vain. The first session saw December diving by 1.46 cents to 49.36 and March lost 1.08 to 52.90 cents a pound. The futures crumbled as speculative long liquidation to finish sharply lower and the weak tone of the market may lead to further losses ahead.
Talks among major players circulated in the pit that China may be on the verge of increasing its estimate of that country's cotton for this season to 29, million (480 lb) bales up 1.0 million from previous month's. The fundamental outlook for cotton contracts remained bearish since estimates of global production have been rising while consumption continues to decline.
On Tuesday contracts ended mixed as speculative sales were offset partly by trade buying but the market could track lower on technically inspired sales over the next few sessions. Traders said that they were going to test the lows and if they could break it.
They observed the weak tone of the market was amplified by the end of the month liquidation enjoyed by some commodity fund with positions in cotton who were cleaning up their holidays. They added cotton has struggled from bearish fundamental specially after the supply/demand report had raised global production.
The Wednesday session suffered from switch trading, as it packed in earnest from investors moving position out of the spot contracts before it goes into deliveries in about three weeks. The traders said switch trade kept contracts under pressure for most of the session, though modest buying kept December contract from falling too sharply.
On Thursday contracts were marginally up, pushed by continuing switch trade ahead of deliveries in three weeks time. The huge interest in December has been burdensome as about 70 percent of total volume traded in the cotton pit ha been in the switch. December is due for 1st notice on November 22. Analysts said whatever activity was, came from speculators who bid market higher after it had sustained over sessions. There was little reaction to export sales amounting to 118,800 RBs against last week's 225,800 RBs.
On Friday futures gained slightly. switch trade remained in limelight. China orders were missing, so market is looking for monthly supplies/demand report for life in the trading. The closing saw December marginally up to 49.21 and March up at 53.35 cents a pound.
LOCAL TRADING: The cotton buying had continued on the eve of Eid-ul-Fitr holidays but the post Eid sessions saw burst of lifting from consumers as threat hurled by the ginners about possible cotton damage from end October rains. But the bid to raise cotton prices as per whims failed. They had to console themselves saying they were able to sell and saved themselves also from headache of puling up, spot rate at the start of the week was slashed by Rs 25 to confirm crop position lately had not worsened.
The Phutti flow to ginneries continued with gusto, however, first session after Eid holiday opened door for buyers who had not expected price will remain favourable, that is Rs 2300/2415 or like amount. Roughly around 50 thousand bales changed hands. All deals were reported over 1000 bales and the highest seen 3000.
On Tuesday buying pace remained as fast breaking season's record. The ginners had no argument to advance except that they have been able to dispose off lots should have been lifted a fortnight back. The buyers have been encouraged by continued low rate who are talking the next fortnightly statement of arrival was expected to have in its bag more happy news.
The bales sold amounted to a few bales lower then previous days. On Wednesday thirst of textile millers had not was as deep and many bales had been lifted on the third day showing the panic buying. Prices were not moving any higher. All players were expecting eagerly the fresh PCGA statement to be bag full of happy news. The bales sold amounted to few bales lower then previous days. spot rate was not changed, nor much change was marked in ready buying.
On Thursday the ginners again expressed inability to release fortnightly statement, second time in a row. The simple issue of the arrival report is being difficult for ginners themselves, for the cotton consumers and the planners. Perhaps they, according to market operators have accumulated huge cotton and they want to sell first while stocking quality lots. Whatever the reason, the week had created history of sales. On Thursday, as spot rate remained stuck up, millers showed no idea. More than 30,000 bales were done between Rs 2325/2425.
On Friday ginners must have heaved a sign of relief that all cotton found way out from ginneries. This caused by keeping back good crop news or ginners leaving the prices unchanged, may be both. The list of deals continued lengthily and as estimated 30,000 bales. Spot rate remained at Rs 2350 and rates in ready ranged between Rs 2350/2425. On Saturday prices showed slight gain as mills continued forward buying.
TWO ENTRIES IN NOV?
As optimistically announced, both Russia and Vietnam are likely to get entry signal into WTO in November Russia has again made the other member buoyant, once when American representative had been threshing out things in St. Petersburg before Group 8 but talks stalled over exports of US farm produce.
The hope is injected into chance as Alcoa, Ford and Boeing wrote a note to Putin and Bush to tighten up belt to write up an economically viable agreement since America trade official is optimistic, signal confirms deal with other 149 members would be through. The super power is full of reservations over a number of issue but they have been talked out and carried successfully and no hurdle will face ahead. Over 13 yeas of talks have le to significantly shrink the disputed points.
American side however had emphasised that after months of difficult talk on areas like intellectual property rights and financial services. Russian Economy minister German Gref. Russia's top trade official who had been talking for possible quick solution for entry seems quite optimistic. But president Putin is far from being swept away by optimism here and there, as he had in view his conflicts with countries such as Georgia which had in due course of time had come much closer to America. Then the problem with Ukraine is there. And unless Putin satisfies Bush on all conflicting matters with all Russian neighbours may cause last minute blockade.
Both Russia and America have moved very continuously, last some thorny issue is left and working later is made irregular and problematic. However, Bush or America is genuinely concerned, the WTO should be made to work as early as possible. American November polls will soon decide whether Bush (Republicans) still has the majority in the congress. Subject to commanding majority in the congress could they be able to give it a legal effect.
However, what Putin's neighbours are thinking and how Bush is managing Putin's neighbour, Russian is not oblivious to the fact. Putin, as a good ruler since it was raised from pretty small job to presidency has run the country well through thick and thin. And all should not be unmindful that last minute debacle created during St Petersburg talks, Putin had persude to become WTO member, but will initially for three years!
WHERE GONE THE PACKAGE?
If yarn is the cause for progressive decline in export of value-added textiles, and if yarn prices are rising due to so called "unbridled" exports, the cure is and should be known to authorities. But after a long time again those who made voices to be listened by the concerned ministries have been out to let them heard. They were logical and pragmatic, as they would inform authorities that country needs to multiply forex earning but their voice proved nothing to the authorities.
The result was annual forex earning stuck up to $4 to $5 billion taken textile export separately. The difference value added manufacturers and exporters would calculate went some cents to $8 to $10. That meant that exports earning be much higher than the existing ones. The trend the report hints shows that there is a bid to fail another textile vision if put to practice in 2005.
The other version why yarn exporters have been insisting on yarn export, and they are deliberately ignoring the harm that country and economy is bound to go to dogs, they should rather hold for a while and think about worsening economy. In this connection some week gap haunts mind, who were the textile package recipients. One by one, over a dozen of sectors sprang up, denying they had received and should have their share. Those who gain, strange enough keep quiet and in the end economy suffers. The WB country Director regretting had recently said that in this country people don't pay taxes willingly.
And as the glaring fact show exports remain bundled up at one level. Quite naturally in that report WB Pak country director, had warned that growth in Pakistan is more vulnerable than the regional countries, China and India, -Now as the elite organisation chiefs are appealing govt to spinning industry. Should one say textile vision 2015, no sources wanted to wait for another report containing trio stand.
US GREETS VIETNAM:
If WTO would be operative with its many rules, the green signal to Vietnam that it is 150th member, should have been additionally occasion to celebrate. However, the occasion is great as one time die hard enemy the US has welcomed Vietnam as a partner in trade. Welcoming the official told a working party meeting that yesteryear adversary into WTO would be an important addition.
The 150th member must have been elated, though it is not unaware of the fact that stretching too much time has given equally important leaders that a short period wait is not in sight. Barely some weeks back Saudi Arabia has been awarded WTO membership. No doubt some years were consumed in convincing authorities, but why talk the past.
The kingdom is today member, just before the membership Vietnam won the same. In 2003 the total membership of this still sprawling global organisation was 146 , so the slow pace a country consumers in getting qualified is apparent. China is heavily burdened with its majority of over one billion population to feed, had been persuasive. The world major countries with lots of wealth and resources were and of course, are afraid of China. But it had to be given the membership sooner or later.
So, it got weeks before the WTO was put on trial in early 2005. China was made to face dilapidated roads. But has been somehow managing as far as textile products are concerned. In other fields, shoes, major parts etc it has still to fight out with top countries such as the US, EU and Canada. India has been quietly penetration where China leaves some space of it. Both had vision to build themselves so strong to defeat any bid to look for resources where from to acquire to make products cost effective. God has given them cotton.
They made it dirt free where required, set up textile machinery plants and started manufacture as back as 1960. Since Pak authorities were back with raw draft from Morocco, they waited until such words were heard in whispers, discover or invent some knowledge based sector to feed the sickening forex earning.
Along that louder bid was warning that textile exports have been contracting. So far only voice about LDC has not been heard. In the meantime, a new country - battered by war not long before emerged as 150th member of WTO. The country has attracted writers which has been ahead in progress and prosperity only second to China. Cheer Vietnam!
MOVES WITH HELP OF CRUTCHES:
So far sponsors of WTO have accused each other of violating rules but China, as an emerging power has not initiated any. The powers which fear it have thrust charges thrice or more. But it has so far fought back and thwarted any penalty against.
The US, which has developed distaste with bulging states, China has contested purely on principles and have been satisfactory. Today China has been faced three big powers the US, EU and Canada on high duty charges on car, truck and vehicles parts. Actually this is a charge which is repetition of earlier ones and it had perhaps convinced the WTO dispute body members. In fact China put forward argument that was very much within the rules. China said the duty on car and parts had been reduced from 105pc to now just 25 percent.
Below 25 percent China had claimed any further duty cut most likely will hurt the consumers. The powers which have themselves being violative of WTO rules and pull chains from distance without satisfying the WTO chief. The WTO chief Pascal Lamy had been hopeful that the July 2006 meeting would end all problems pending and all members would hoist flag ensuring trouble free movement in the global organisation.
The powers had set good and convincing behaviour when they built the nations airports, bridges, schools, hospitals and trade centres devastated by the second world war. But the UN is now giving way as it belongs to the nations and people of the world. Similarly, the global trading organisation supposed for the World poor primarily is subject to haggling, much lies than the powers consume in signing BIT, or FTA. China is since emerging power, very fast coming power was welcomed in 2001 after years of haggling what it will give to others.
REASON: It has 9/10 pc GDP, trillion dollars reserves, either has equalled Japan or is close to that country's highest reserves in the world till very recently. China's strength is disturbing powers and naturally grudge Chinas fast and smooth progress. The support power since last decade or a few years more just can't see.
Incidentally the US involvement in unnecessary wars in Afghanistan and Iraq and muscle pulling with Iran, war preparations like star wars have eroded value of its currency while China's yuan is going ahead stronger and stronger. And China has declared it will reform its market and currency but in its own fashion as and when will be judged right. America as it has the characteristic to never do work alone has Japan, Mexico, Argentina. Australia and many others are expected in 10 days time including Taiwan. The patience is required to hold ones nerves to see the WTO panel deciding China was, in regard to 25pc duty on auto parts, right or-!
TAIL PIECE: Two of the three PCGA fortnightly statements have so far been deferred reasons that cotton belt growers were either not available or were too busy in Eid celebrations. Under genuinely impossible circumstances, missing one or two in a year could be tolerated. But difficulties they create to correctly assess position, more so, discrepancy changes in fixation of price becomes a game for gains for one or the other players. And, above all, the planners have 100pc chances of making errors that could hurt the economy.
The govt has been engaged in correcting the filth gathered during last 60 years has today led to stinging halt in textile products and many other sectors such one is sugar. WB official regulating affairs in Pakistan recently said that there are few in Pakistan, rather in Asia, who willingly pay taxes. Similarly, under- invoicing and other trickery in customs and excise, though govt has not been able to lay hands on recurring abuse. Today's newspapers painfully report that sugar is again in the news with Rs 3 per kg rise.
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