Cotton buyers, sellers uncertain about markets' future direction, prices turn lower

The hope and disappointment has led cotton market to trade on unusually low turn and tone, buyers hoping for low rate and some grace from authorities and seller in double mind what to do and otherwise as new crop arrival started while spot rate stayed stuck up at Rs 3,350, during the week ended on July 4, 2009.
INTERNATIONAL SCENE:
As time neared for a more visible USDA report about the planting acreage the optimists indulged in buying pushing futures higher. The bad weather in Texas, largest cotton growing areas are expected substantial cut in acreage resulting in low production. The Reuters survey report revealed that average of 8.779 million acre down from March. More optimists conversed among themselves the acreage may be put at 8.5 million acres. But when the date was handed down defeated all speculation.
The USDA date put was slightly higher then 9.054 million acres. Trading ended the day with slight gain in futures. The outside markets were generally down giving little support to cotton futures.
The new crop December cotton contracts gradual looking up and more so towards the end of the week offered insight how crop in days to come will behave. The July maturing future showed firmness over investment fund buying, which was operating off and on players said hoping new crop will attract for its quality.
On Thursday, the NY cotton futures settled slightly firmer on investor buying before a holiday weekend, but analysts feel the market is due for a pullback, given the troubled economic outlook. The new-crop December cotton contract rose 0.44 cent to close at 60.92 cents per lb, dealing from 59.33 to 61.29 cents. December volume 7,709 lots at 2:38 pm EDT (1838 GMT). March added 0.47 cent to end at 63.19 cents.
The improved buying was, analysts said because Friday was closed holiday. Beside crops keeping generally low profile, economic outlook is a threat to futures (cotton). As for as cotton is concerned slight difference is being seen.
The weekly exports, sales and shipments showed bulging size. The hope now is pinned in monthly supply demand report next week.
LOCAL TRADING:
The manufacturers and exporters of textile products did more to wait and call for some help from some source, last of the series being in the budget 2009-10. But end result was merely disappointment. Local and international both help was merely promise. The US or the EU all have promises pending. Legislation is a must before any offer is given shape.
Meanwhile, trading depended, in view of the cotton consumers on the lower rate of cotton, which until beginning of the week ginners refused to oblige.
However, ginners had their problem, they held a stock of nearly 200,000 bales of cotton. And, in the meantime fresh crop arrival expedited-millers prefer to use the new crop considered qualified for the exports of made ups. The ginners had now compromised and consumers are turning to available cotton. The spot rate was unchanged while nearly 800 bales of cotton changed hand around Rs 3,335 per maund on Monday.
Next session was another sluggish as 600 bales of cotton changed hands in price range of Rs 3,200 and Rs 3,300, below persisting spot rate. The international condition was to a great deal reflective. The prices were still on the higher side in consumers view. Phutti was selling in Punjab at Rs 1,825 - 1,850, while in Sindh between Rs 1,725 and Rs 1,750. On Wednesday slight rise in trading activity was marked particularly lifting newly arrived crop from field, ginners were trying to get rid of old stock and selling at consumers will. Spot rate was unchanged, phutti price, in Punjab were unchanged. Nearly 2000 bales were lifted in price range of Rs 3,275 and Rs 3,325 per maund.
On Thursday fresh downpour in Punjab cotton belt was considered favourable. Some 2000 bales of cotton chanted hand between Rs 3,300 / 3,350. Phuti remained unchanged. TCP failing to receive favourable profit, was asking foreign firms to by cotton.
On Friday stable trend was seen despite the prediction for higher-than-expected production. The official spot rate was unchanged at Rs 3,350. Phutti prices in Punjab were unchanged at Rs 1,800-1,825 while in Sindh, the rates moved up with modest rise of Rs 25 to Rs 1,750-1,775. Some 600 bales of cotton changed at Rs 3,350.
Commenting on the firm trend in the prices, some analysts said that the mills were interested in buying of fine quality cotton at the reasonable levels, as the ginners were not lowering the asking prices. The mills are busy in purchasing of forward buying despite the news that the cotton production may exceed the target for the current season. Many farmers from Ghotki and Dharki, Badin and Sanghar were taking interest in sowing of rice crop due to lucrative rates but the government is not allowing them to do so.
On Saturday steady trend was seen on as tug-of-war started between the buyers and sellers. The official spot rate was unchanged at Rs 3,350. Phutti prices in Punjab were moderately up at Rs 1,825-1,875 and in Sindh, the rates maintained upward trend trading at Rs 1,800, they said. Approximately 1,200 bales of cotton changed hands at Rs 3,335-3,350, they said.
BANGLADESH GARMENT MAKERS:
Factories in South Asian nation have been hit hard by the global economic crisis, with several reportedly cutting wages to compete for orders with other garments producing countries, such as Vietnam, China and India. In Bangladesh workers protesting against the cut, a garment worker was shot and killed, as thousand of factories employees protesting wage cut clashed with the law enforcement officers.
The factory workers wage cut seems strange. How the global economic crisis could be cause for the same. Utmost the punishment of any type could be for spoiling the quality of textile products if it is proved wilfully done. The workers are hardly shared when wind fall income is earned. So far four big names have been reported who actually are leading exporters of textile products, BD being accredited with LDCs with duty free access in countries like the US and EU in bulk.
Inexpensive clothing accounts for 80 percent of Bangladesh's exports, which are vital for BD economy. This fact is imperative to care for the welfare of the workers. So far Pakistan textile manufacturers and exporters are hell lot after convincing authorities how helpless they are finding in producing textile products with export edge over rival.
The voice against workers wage hike was raised when Pakistan government fixed minimum wages of workers at Rs 6000. What resulted in voicing was not clear, but latest provocation signalled by four immediate rival is bound to irritate. The Almighty Allah gives patience and government is able to collect enough revenue from different sources, which fed the hungry, plus helped development of roads, dams and necessary infrastructure which year after year remains neglected on one count or the other.
APPAREL TEXTILE UNITS:
Some way will have to find out, soon and on permanent basis. This does not sound good reminding government the textile sector is in dire straits, it earns maximum foreign exchange, and employs largest number of labourers. Why the sector is not improving its forex earning, however remains a paradox. Anyway, time now is said to be worst and something or other should be done to reach its size of earning of South Korea and other countries.
The world textile experts addressing press conferences and workshops have always expressed concern as to why Pakistanis bank on exports of yarn instead of add-value to earn ten times more. The advice gradually seems to have attracted some ventures one who fell on apparel, garment, hosiery towel etc making, but they feel discouraged because they have lost competitive edge and thus losing markets. The apparel makers faced with absence of prospect, either manufacturing less then orders in hand with them.
Lately competitiveness apart, apparel makers have also come under ill effect of global worst draw dawn. However, the courageous manufacturers and exporters of products after value addition seemed harassed particularly by raise in power tariff from July 1, 2009 a decision they complained after passage of budget 2009-10. The other reason why they felt utmost discouraged was importers instruction not to visit Pakistan for security reasons. The government hard up in many ways is no doubt all possible help to exporters. Will it be possible for it to remove bottlenecks in the way highest earners of per unit.
PEST ATTACK TREAT:
Thank God pest threat came quite late this year. Some minor warning was hurled early days by the field workers. The steps desired to hold back spread was not heard again for months, but the other day about Jassid attack. Such reports are not frequent, but both buyers and sellers have grounds to either force down lower cotton rate or raise the same. The most frequent and a sort of must is that the field report is that bumper crop is hoped or pest attack has been witnessed and growers, like the present one, report that some pest attack is feared to boost cotton prices. In fact before any reliable source come forward will the threat of particular pest, cotton prices are raised.
The countering measure adapted by the cotton consumers is raise noise that they stop buying or form cartel to buy cotton at certain price. This may also be practice in small countries of Asia and Africa, but in developed countries such practice abhorred.
The authorities who are one or the other way look after the cotton growers, and other interests should stay alert always, as nothing has been adopted to stop such other practices such as threat of cotton imports from nearly countries where cotton is available at cheaper rate. This pull and push has denied Pakistan dirt free cotton culture despite passage of over 60 years.