Rising price trend in local cotton causing reservations on the part of consumers who laid hands on only quality lots without grudging asking prices as opening for garment exporters streamed down in the reported absence of India and China hit by high cost of doing business.
The rates in ready ranged between Rs 3600-4000. During the closing session of the week KCA official spot rate was raised by Rs 50 to Rs 3750.
WORLD SCENARIO:
Cotton contract on Monday ended down as most players stayed away waiting commodity futures trading commission finding what led to distortions and wary investors liquidated modestly. Many hazy about emergence of any clear solution of probe laid hands on certain formidable player/players. However, July contract shed 0.30 cent to close at 65.44 cents, while December lost 0.21 cent to finish at 74.16 cents a pound.
On Tuesday trend continued as investor sales and nearly all the commodity values suffered setback. The effect of the CTFC probe may also have led to sort of consolidation. The findings of the probe were not announced and whatever was talked and done was in utter nervousness. However, swap is being hinted under which a floating, market or spot price specified period. There seems no agreement among the players whether options related sales or the CFTC move had pulled contracts down.
On Wednesday slight improvement was seen in cotton futures in NYCE trading. The trade buying overwhelmed investors' sales. The CTFC's finding about distortions in trading that led to abrupt rise in prices, was to be transparency in agri future markets, is still not fully accepted by the trade. Weekly export sales are awaited to give some positive hints about businesses.
On Thursday contracts ended with gains mostly due to what players said spread business. Analysts commented the firm outlook also stemmed from other commodities that traded on higher plane. The weekly export sales showed at 577,900 RBs (500lbs each) better than last week. Meteorologists are reporting serious drawback due to record heat prevailing, strong wind and blowing sand particularly in W Texas.
On Friday similar trend was apparent backed by fund buying additionally strengthened by reports from commodity markets. Players expect coming week to follow suit. The firmness, is said to have been caused also by reports of dry and hot weather in Taxes, the largest cotton growing area. "Soil moisture is badly depleted" weather pundits said.
LOCAL TRADING:
The add seeking facilities and incentives from government claiming good opportunity to export garments and earn added forex as India and China was reportedly handicapped and may drop, has led cotton prices to firm. The consumers, however, wait for opportunity for such lots, which may be acceptable to textile importers. The ginners in look out for an opportunity that had come their way kept prices firm. New crop contracts are being concluded and arrival reports are awaited to determine needs and price size.
In the meantime whatever is available is being lifted. The spot rate has reached historic size - Rs 3700 per maund. In ready off take prices range between Rs 3800 and Rs 4000. The spinners and textile manufacturers express they are still in need but chose only the quality cotton. The new crop, if all get ripe in time is booked for supply by June end July.
Any way on Tuesday, trading remained stagnated owing to perception that the ginners won't be able to hold on the stock, however, small that may be and ultimately buyers will lift at agreeable prices. They said the cotton import was not likely to cost them any lower than the ruling prices in local markets. The ready off take was lower while forward deal was noted at Rs 4000 for August 25 delivery. Current deal was only 500 bales at Rs 3500.
On Wednesday sellers were found tough and held back stocks to have more gains when the consumer return to market. Sellers know the stocks and mills needs. Only deal was struck was priced at Rs 3800 over Rs 100 to Rs 3700 spot rate. Apparently millers seem to be in trouble as they are aware cotton at this juncture is not available under local lint prices.
On Thursday a solo deal of 1400 bales was struck at Rs 3900. The cotton shortfall is encouraging cotton consumers to take advantage of assumingly falling trend in a neighbouring country. The free market economy is giving opportunity to buy and sell cotton but government should weigh why is it that cotton shortfall is experienced and imports are preferred, in season or put of the season. The season always opens on pleasant note but shortfall has become the fate of Pak growers, which is helping deficit to grow, grow and grow.
On Friday needy consumers lifted some 4000 bales at higher prices ranging between Rs 3825 to Rs 3975. The ginners are said to have nearly two million bales and are determined to sell at will. The consumers who prefer to go for imports may decide as such. The spot rate stayed at Rs 3700 on Friday.
Spot rate was raised up to Rs 3750 on Saturday. Ginners were not lowering the asking prices, perhaps till the announcement of federal budget. Falling trend in the NY cotton market is not affecting the rates in the local market, which is no doubt, a surprise for the cotton circle. A solo deal of 400 bales from Gilaywal at Rs 4000.
CORRECT DATA HELPS:
CORRECT PLANNING
The attaché at the American Embassy in Islamabad proved the first to study and release of likely cotton production during 2008-09. The sensitivity to know the correct data comes from curiosity to know and relate them to good planning. This honesty of purpose has led that country to know and reach the peak of civilisation, technology and prosperity.
Today, may be a deliberate bid, or some wrong policies to dominate, a bit of lurch here and there has impacted host of countries in Asia, Africa and elsewhere. This area to know to date, or as is so much heard today research and development, to feed the unfortunate planners to correctly visualise things to come. More particularly progress and prosperity is absent in the scheme of things.
The Attaché has shown the path, the basis has not been received at this end, but data preparation has been most abhorring job. In Pakistan, elsewhere in some parts where conditions are good and water availability is normal (though reports say some parts have been short) sowing has been in progress but tail-enders have been praying monsoon bring cheers for them. Even if God is kind and help the farmers and progress is reported considerably late.
The normal data call the growth normal and likely production as bumper, interests mushroom to float their own valued study and findings of crop position. The unfortunate planners have to pick up facts as near as possible, which generally has proved to be highly misleading. The PCGA has been regarded as handling this responsible job with tact and care. The Minfal, at some stage, steps in as is commented by highly knowledgeable circles with certain correction here and there. Then there is cotton assessment body that has to play a role, as a matter of routine. Will at any stage honest and correct reading of crops will be supplied to the planners?
Attaché sees 2008-09 of cotton production at one crore and 20 lakh bales against current production recorded around one crore/12 lakh bales. This was supplemented by imports of about 40 lakh bales. Are we heading for yet another year of shortfall?
HOW TO MAKE TEXTILE SECTOR VERITABLE?
The Prime Minister has been known by this time that he means to do away with the wrongs that have unfortunately persisted. And, indeed, setting right suffered for ignorance and bothering nothing but self-aggrandisement. What however he has not spoken anything about how he will make textile products today suffering from high cost of doing business to compete in international Market.
The experts by now might have dropped hints why it suffers from high cost of doing business and what has led for the last decade to Pakistan to remain net importers. Those countries like China, India, S Korea and even Vietnam who want to see an eye to eye to rivals set up, build or make what is going to make their country progress and prosper.
Finding fault with the facilities and system available here is some thing to hide the managerial, structural and leadership quality, which has done immense and colossal loss to economy and country. And yet Pakistanis dare not scale up the hill but counting the number of enemies beyond that. The inevitable investment is the hill top, which has been dreaded stuff making Pakistan store room for the foreign manufacturers of textile machinery, dyes and chemicals. The companies producing low varieties and claiming to have been saving foreign exchange.
Those who write in supplements that appear with time gap wonder even after 60 years chemical industry that has made counties to achieve remarkable progress and leaders of the world have shamefacedly net importers to this country. The companies producing insignificant brands of dyes and chemicals etc have no match and have till now posed any threat to dyes and chemicals being imported draining out billions of dollars.
Leaving aside the imports, which add to high cost of doing business, textile exporters insist on subsidies. Forgetting rival countries manufacture every stuff that textile sector needs such as textile machinery, units producing chemicals and dyes not only catering to the sectors needs, but exports too rival counties are offering to textile sector. God help the country!
DUTY ON RAW MATERIALS:
Perhaps Engineering Development Board (EDB) will be going through the details of the Budget to pick up points the finance minister had duly accepted the proposals. The board had in its editorial in May issue had desired that duty should be lowered in order to keep prices of finished goods at affordable level. General belief is that government has been far too conscious to facilitate exports to possibly heat the imports fat volume.
In this incentive that lower duty help products to earn edge against foreign products. When imports and exports are talked very naturally textile exports come to mind with contribution of more or less 60 percent higher than any other exports group. For sometime past the sector is dwindling and continuing so which is making authorities worry.
The exporters have been holding generally as roadblock in textile exports way the high cost of doing business. Lower duty was likely to find place in the Budget, and it was also believed that exporters will find favourable to have and edge when exported. Will the favour reach near covering the losses done so far.
With EDB comes the idea whether it needs equally serious question as to why it has been kept orphan and whether the present coalition government is seized to this? Before this lingering issue is solved eyes are fixed whether EDB's proposal has been given effect to. It has not only been concerned about welfare of exports, which it proposes to get help so that export flourish and economy by and by is sagging also get boost.
However, how truly it depicts when before ending the editorial it adds to its demand that industry turned more competitive through facilitation rather than providing undue protection."
VARIOUS TEX INDUSTRY SECTORS:
Thank God textile quota abolition exposed those sectors who contributed least and as knowledgeable circles expressed their belief, got all possible favours from banks and successive governments. Their run to the corridor of power in capital today shows their desperate bid to regain some confidence lost since so called high cost of doing business has shaken the skies.
How far they stay trust worthy is not being questioned here, but the fact that about half a dozen textile sectors operating in Sialkot (And of course other export sectors) been contributing much larger to their scope and size. But never in the past had ever come to light the fact that accredited to front runners.
The present government should reach the depth of the textile problems rather than trusting the voice reached. The high cost of doing business with all its ugly facets, which are not being discussed, here not they are worth. What the government should acknowledge is that it must mind textile sector and exports today showing disappointing trend contribution to the levelling trade deficit should not consider all the sector together but separately.
The government, which have all along been fed by bureaucrats have not always given the truth. The value-added sector like made-up garments, hosiery, towel, bedwear etc have always been over booked by the high ups in the capital. They have, until they joined the common struggle caused by high cost of doing business, they aired their anger against high cost of cotton yarn owing to in their words unbridle exports. Their shout even to the top never reached authorities with power to make decisions that yarn exports serve the purpose of their competitors.
But yarn was never, as the value-added manufacturers claimed, held in check to be available to exports of made-up, which earned (and possibly earning even today) 10 times and more. The authorities will do good to listen to reason and the selective to contributors according to the contribution.
ACTION TO MINIMISE LOSSES:
Warning that Badin facing water shortages should be among the top government priorities to heed and salvage agricultural crop from bigger loss. As a matter of fact experts in this country and even concerned authorities should take it as their failure if, Pakistan being an agricultural country, is forced to import rice, sugar, wheat and cotton. The past has been extremely wasteful for reason known to men in the streets. When God is merciful and all is well at the end of the season and harvest is declared a bumper. But all sorts of mechanism are applied to press government, which in democracy needs votes, which comes via influential, for exports. And once exports are allowed the prices start surging and hoarding goes side spread. This was besides the issues.
The warning should be heeded for some how arranging water without any bias. In this connection storage seemed to compound at tail-enders level. This particular mention of the fact demands agricultural field workers should go round detecting any possible foul play. Once again democracy return has been welcomed, which after a couple of years has invited dictators.
Should not after 60 years of independence with a Constitution beginning with the name of Allah and Islamic Republic of Pakistan, Ponder what has kept federation small and infirm and unable to give every Pakistani the right of being as such.
The authorities should begin with making seasonal crops grow to deny imports. Too much nagging is heard about shortfall in cotton production. But the available cotton with growers is not patronised with smiles - with fair return. Every rise in price is reacted with pressure to bring down prices. There is no one for umpiring how far the ginners resort to asking unfair price. The buyers and sellers are from day one at loggerheads. The need and production should be correctly determined and stood by so that justice and not the principle of supply and demand is adhered to.
The State Bank of Pakistan (SBP) in its third quarterly report urged policies to increase agriculture productivity. As the disappointing harvests of key cash crop are particularly troubling for Pakistan. The US commodity markets chief regularly has hinted at commodities malfunctions may be contributing to rising food and energy crises. What malfunctions he has in mind, and, whether those have any bearing on our market.
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