The cotton trading activity is nearly in doldrums as sellers held on to the stocks with them and buyers waiting price movement to the downside. The spot rate was stuck up at Rs 3,700.
WORLD SCENARIO:
The cotton futures in NYCE trading determinedly showed rising tendency with the help of persistent fund buying or profit taking. The key July rose 0.69 cent on Monday to settle at 60.54 cents a pound. The short trading activity could be described as futures finished up even month high on all round fund buying.
The players remained, however, looking for the crop report. Brokers said there was also talk of a merchant buying a sizeable amount of cotton. An optimist - a dealer said this meant demand is becoming stronger as global economies try to shake off the recessionary impact of an economic slow down. On Tuesday profit taking pulled futures down, despite seven-month high strength showed earlier. Cotton futures jumped in early business spurred on the monthly supply demand report by the USDA where world ended stocks to 57.77 million (480 Lb) bales from 62.31 million bales in 2008-09. Production is put at 106.46 million bales and consumption at 113.54 million bales.
On Wednesday sharp rise could not be held back and down turn stepped in following profit-taking. An analyst commenting on the situation said that players had gone too fast pointing at the market which they took to be top heavy that seemed likely that key July contract should last 57 cents just ahead.
On Thursday futures were firmer. They players, however, awaited some inspiring report for movement. The players expressed worry while talking among them they had to wait and watch what was going on with the economy. Meanwhile, inspirer weekly export sales according to USDA went down 89,000 RBs from 142,900 RBs. But players were still in search of some light to show them the path to move with confidence. The July contract shot up slightly by meagre 0.02 cent to 59.06 cents a pound.
Given the weakness of the market's Friday performance, Stevens and other analysts feel cotton may take a stab at lower ground next week. But further downturns may be brief since trade mill fixation buying is expected to show up by then.
"We should see the mills and some importers show up if this goes any lower," one dealer said. Brokers Flanagan Trading Corp sees resistance in the July cotton contract at 56.75 and 57.85 cents, with support at 55.50 cents.
LOCAL TRADING:
The trading in cotton proved low owing to sellers reluctance to offer better quality lint and offering low ones at higher asking prices leading to Rs 50 (50) push to spot rate taking same to Rs 3,700. On the day approximately 2,200 bales of cotton marked changing hand. The asking price was higher at Rs 3,800 per maund. The cotton consumers were very upset as India was presumably not willing to supply cotton at the low contracted price. The local cotton which millers would have easily bought around Rs 3,500/3,600 wont be available at this rate. The spot rate has lately gone up to Rs 3,700 while cotton bold on Monday was high as Rs 3,800.
On the second day of the week, Tuesday, no transaction was marked as the day was declared holiday in Sindh. The official spot rate was at Rs 3,700. Phutti rates and rate in ready was not available for obvious reason.
On Wednesday - when market resumed activity after a day's closure, trend was as sickly as listless conditions were reported, buyers were reluctant due to ever rising prices. This reluctance was very deep as two deals were reported having finalised but change of hand was not marked. The failure of the cotton buyers was disappointing as order were in hand and according to reports authorities were out to help textile exporters through facilitating them as many ways. The spot rate was stuck up at Rs 3,700.
On Thursday cotton trading was boosted at ruling prices for buyers were lifting to meet their immediate needs. The buyers bid during sessions stay on the sidelines proved futile, as market commented ginners had manageable stocks of cotton with them. Thus market believed this was high time TCP entered the market to play its due role to stabilise the prices. Meanwhile 10,000 bales of cotton were lifted between prices Rs 3,475 and Rs 3,800 while spot rate was unchanged at Rs 3,700.
On Friday prices showed steady trend on the cotton market said. The official spot rate was left unchanged at Rs 3,700. Nearly 10,000 bales of low and fine cotton changed hands between Rs 3,425-3,800.
According to the market sources, the mills gave up wait-and-see attitude and again started buying cotton to meet the near-term need. As the ginners have not much unsold stock so they did not lower the asking prices as they also did not want lose earning chances.
They said that erratic movement in the NY cotton futures, propelled the mills to think about flexibility in attitude of ginners toward prices. It is likely that the Trading Corporation of Pakistan (TCP) may enter the market any time, the interesting thing to note is how the prices move after it's participation?
On Saturday lacklustre condition was seen on the cotton market. The official spot rate was left unchanged at Rs 3,700. According to the market sources mills were conspicuous by their absence as they were hoping that the ginners will lower prices after sharp fall in the NY cotton futures.
BAILOUT RULED OUT:
Such outright expression of regret for the maximum earning forex singly seems authorities have not only been empty handed but also realised going out of the way to help may be violation of WTO. The authorities must have been care ridden for holding back the textile project since 2007 for just Rs 500 million. The textile city, had it gone, along with other projects like garment city (cities) might have helped in forex earning manifold by now.
But the announcement of textile cities and garment cities, according source in close observation of the textile and garment sector, the high cost of doing business took alarming size. Since election time was on peak, the rulers showing a lot of inconvenience to yield the textile manufacturers and exporters, still quite a good size relief was offered, but rulers faced debacle.
The textile exporters have not rested for a while, and collected facilities offered to immediate rivals and brought in sharp focus causes that was to add to high cost of doing business. The other day they had hopefully advanced their requirements to try to earn $10 billion target, considered by many hard to be achieved.
If WTO has really intervened, which is nothing new, and Pakistani authorities went against bad fallout can be expected. Under the impact of IMF terms authorities have to be cautions to achieve the position result to slow the donors. The optimistic government hopes to double the earning from textile exports.
The loud problem textile exporters are expressing is indication of impossibility to hit $25 billion in next five years. If exporters have least concern, the sources said, that IMF still estimates Pakistan needs additional 8.3 billion dollars to tame the berserk economy, they will leave no stone unturned to hit the target and oblige the nation.
REMOVE DUTY ON PSF:
The local investors stay comprehensive. They have made enough headway to sail smoothly. They are, in this country, very vulnerable to survive unless they are cared and given enough help and resources to weather insurmountable. In fact early stages are when they pool their own resources and fight odds with savings and small loans from neighbours and relatives.
Soon they come in contact with investors they have experienced ways to exploit others resources at the cost of projects sacrificed telling heavily on the economy. The country's plight is on this count and rulers who don't know the art of running a country for being ignorant to either to lack or just turn play thing in the hands of fellow travellers.
The country needs money and for that need a flourishing business and exports. But export products suffer from high cost of doing business. Thus exporters, say the sources close to exports, consume more time in search of resources rather than thousand times less in search of prospective world markets.
The textile exporters had quite lately learnt to consume PSF with cotton, according to them around 20 percent. The exporters of textile feel that government should oblige them by removing impact duty of 4.5 percent in the upcoming budget 2009-10, beside setting aside the import restrictions, that cause a burden on local industry heavily.
During ongoing season customs duty on import of PSF was fixed at above cited level while PSF was allowed to be imported in the duty, duty and tax remission for export (DTRE) scheme. The textile exporters are naturally being hard up taking many man made fibre (MMF) including Viscose, Modal, Acrylic and Tehsil being protected despite no manufacturing within the country. The same has been according to textile manufacturers and exporters main hurdle into growth of textile value chain. The sources noting problem felt authorities can do something to ease textile exporters while ensuring PSF manufacturing goes ahead well!
BUT EYE ON OUR SOVEREIGNTY:
Only the naives will celebrate report that Pak trade deficit crossed $14 billion during July/April of current fiscal due to negative growth of exports. It hardly ever so happens unless imports shrink- in this case 9.78 percent to $28,922,367 million (nearly 29 billion dollars was recorded. Registering size of imports is as disheartening as the ever rising trade deficit. We Pakistanis need efforts to scale up exports and leave nagging about high cost of doing business.
Today or tomorrow this attitude will have to be given up. As the government feels to facilitate poverty ridden people with a day's rest commonly known as holiday the funny things with the holidays is that government had to decide to cut down national holidays to cover some loss indeed losses particularly much hyped loss in export.
This city the other day observed a closed declared holiday on May 12, whether it was called for apart, Karachi alone was deprived of Rs 10 billion while manufacturing and industrial goods share is almost half of Rs 10 billion. One can ask whether anybody had thought Pakistan is pressed by world donors who may take it as our luxury, sources close to economy asked. The city has wealth of textile products and quite understandably exporters have good quantity in hand how they must have felt about the loss.
The FBR has quite often been crying hoarse about the fumbling while recently expressing displeasure over the enforcement campaign of its agencies. The world is aghast how badly economy is going and whether its is going to bettered anytime soon. Where the loss will be bridged from? Going all over for begging for meeting shortfall is too costly. World donors with tons of money are saving happy to offer, but their eye on our sovereignty for which nations sacrifices lives!
TEXTILE SHOCKING CUT IN WORK HOURS:
Sometimes so happens that authorities not only have to make difficult decisions but impossible looking one. With all plethora of aches, latest is settled issue of keep textile industry free of load shedding. The burning Karachi demand for the last few days has prompted authorities to put textile industry under five hours local shedding tentatively until May 19, 2009. The meteorological prediction and raining fire seems anything may happen after the 19th. The textile industry has been doing every thing to make up for textile exports till date due to the change in world scenario - EU has lifted dumping duty on bedwear and home textile products which is very consoling despite a host of local odds, the latest, being another nearly week long load shedding.
The rulers of the country have to go into the depth of small and really insurmountable odds which is people's own making. Is all wrong with load shedding making of those who pay their bills and taxes unfailingly?. The responsible company under pressure was already managing burden of shortfall by observing six hours load shedding for domestic consumers.
The company explaining reason for the harsh measure, sources close to industry said, as explained was due to rising demand for the power as temperature is keeping high. The demand went up to 13,064 MW against 4470 MW compared with last year's. Sources hoped temperature will give way to normal so that the production in industry could be normal to fight the odds offered by global manipulations and often rising and often depressing recession.
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