Cotton trade on domestic market turned to dull from good due to Muharram holidays; prices retain high profile globally

Spot rate fluctuated both ways on the cotton market, remaining attractive in weeks early days, but trend turned to worse towards the end, buying remained on the higher side during the week shortened by Ashura Muharram. Spot started journey at Rs 9100 and closed at the same rate after a few fluctuations.
WORLD SCENARIO:
Cotton futures broke all time price record, and it seems there is no respite. In 1995 for the first time ever cotton price ran amok above one dollar and some cents compared with today's more or less 1.4097 cents. The lint has been proudly held as the best performing commodity of the year 2010 up nearly 76 percent. The players in cotton business see prices to excel further before long. China has been engine for price hike in cotton. The country has been more concerned about inflation.
After, for the time it has no plans to raise interest. Cotton imports too are slow relatively. What is engaging attention of the relevant players is on the prospective spring 2011 cotton plantings. They are particularly in view of the largest cotton grower the US is being quoted at increased average - around 12.2 million acres, 12 percent higher than the outgoing season. Meanwhile, players are embracing to meet soaring cotton demand from China.
The buying from round the world, China inclusive sealed higher. A section of the relevant cotton dealers, however, see the tempo was nearing sharp correction.
On Monday the US cotton futures ended up the daily limit at a one-month top on speculative buying, but dealings were light as most players seemed content to remain on the sidelines for the moment, brokers said. The benchmark March cotton contract on ICE Futures US rose the 4.00 cents daily limit to finish at $1.4097 per lb, with the session low at $1.3697. It was the highest close for the second position cotton contract in over a month. Total volume traded hit about 12,500 lots, about two-thirds below the 30-day average of 34,500 lots, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures soared to their 5.0 cent daily limit at Tuesday's open, playing catch-up to the overnight rally when it surged to levels unseen since November 10, as buyers continued betting that supplies would not be sufficient to meet demand in top consumer China, brokers said. Technical buying took over when a large gap was left open on the cotton chart overnight, as buyers in China followed up the 4.0 cent daily limit rise in Monday's session.
Benchmark March cotton prices on ICE Futures US rose the 5.00 cent daily limit to $1.4597 per lb, the highest level for a second position cotton contract since November 10. March futures later pulled off the high to trade at $1.4557, up 4.6 cents, or 3.26 percent. Volume for the contract was healthy at 9,877 lots by 11:10 am EDT (1610 GMT) At Monday's close, total volume traded hit about 12,500 lots, about two-thirds below the 30-day average of 34,500 lots, Thomson Reuters preliminary data showed.
On Wednesday the US cotton futures finished lower on investor sales and slower consumer buying as the market saw a brief correction after jumping to its highest levels in nearly a month. "All we have seen is a pause in the rally," Mike Stevens, an independent cotton analyst in Mandeville, Louisiana, said. Cotton is the best performing commodity in the Reuters-Jefferies commodity index, up over 75 percent year to date. The key March cotton contract on ICE Futures US dropped 2.35 cents to end at $1.4214 per lb, dealing from $1.4106 to $1.457. Volume was running below the average, with the total estimated at 19,000 lots, about a quarter below the 30-day average at 33,200 lots, Thomson Reuters preliminary data showed. Cotton values in top consumer China also trekked lower as well, with the May cotton futures last done at 27,395 yuan per tonne, down 570 yuan on the day.
On Thursday, the US cotton futures settled higher on speculative buying and the market's momentum could push fibre contracts up further before the year-end holidays. The key March cotton contract on ICE Futures US gained 3.98 cents to end at $1.4612 per lb. It traded from $1.4258 to $1.4614 - up by the 4.00 cent daily limit. But trading volume was thin at an estimated 12,400 lots, two-thirds below the 30-day average at 33,400 lots, Thomson Reuters preliminary data showed. Sharon Johnson, senior cotton analyst at commodity brokers Penson Futures in Atlanta, said mostly speculative buying boosted cotton contracts. She estimated the market may try to "put in a double top" around recent highs near $1.52 in the days ahead. Cotton values in top consumer China provided little inspiration. The Zhengzhou Commodity Exchange's key May futures last traded at 27,640 yuan per tonne, down 20 yuan.
On Friday US cotton futures rose nearly three percent to settle at a one-month peak and near record highs as speculators plowed into the market on the notion it had run out of new supply in the near-term. "Basically, the projection is that there's very little cotton, if any, to be delivered into the March contract," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
"It's not a new story, but one that is driving this market until we find a way to ration or reduce the demand." But some think cotton could actually fall in the coming week, ending a three-week run-up, if investors decide to take profit ahead of Friday's pre-Christmas holiday. "Next week is a short week longs may decide to cash in," said Sharon Johnson, senior cotton analyst at commodity brokers Penson Futures in Atlanta, Georgia. The key March cotton contract on ICE Futures US settled up 4.0 cents, or 2.7 percent, at $1.5012 per lb. That took the market to its highest level since November. 10, when it hit a record peak of $1.5195.
Cotton has been the best performing commodity in the Reuters-Jefferies commodity index, up over 80 percent year to date. For this week, March cotton was up 10 percent, extending its 22 percent gain from two previous weeks. If supply fears continue, cotton could rally to a new record above $1.60 a lb with some intermittent profit-taking, independent analyst Stevens said. "I'm shooting darts in the dark here, but this is very possible," he said. "You're talking about a market that's doubled in price over the last six months.
LOCAL TRADING:
Trading in cotton was marked down compared with the enthusiasm shown by the buyers, despite prices in local market were attracted while world rates managed to rise on China's count. Buyers lifted 18000 bales of cotton between Rs 8700 and Rs 9200, slightly above the spot rate. Spot rate was unchanged at Rs 9100. Phutti prices ruled in Sindh and Punjab at Rs 3900 and Rs 4200.
On Tuesday spot rate, as the buyers were expecting lowered by Rs 200 to Rs 8900, seed cotton prices in Sindh and Punjab stayed put. Against hope, cotton bales lifted were down to 15000, seed cotton was sold between Rs 3900 and Rs 4200.
The market sources noted the buying had slowed for two days closure on account of Ashura. They saw locally prices holding at higher level as world rates were firm.
On Wednesday the declining prices showed strength as both the spot and prices in ready turned higher. The spot rate was raised by Rs 200 to Rs 9100, Sindh and Punjab saw phutti prices ruling at Rs 3900 and Rs 4200. Slightly depressed buying was witnessed at 16,000 bales changing hands in price range of Rs 9000 and Rs 9500. The downward trend elsewhere in the world could influence sellers in Pakistan who raised the price instead. However, buying down by three to four thousand today was caused also keeping in view the holidays ahead and gas and power hurdle.
No business activity was seen on the cotton market amid post-holiday session on Saturday. The Karachi Cotton Association (KCA) spot rate was unchanged at Rs 9,100. Seed cotton prices in Sindh and Punjab were unchanged at Rs 3900-4,200, they said. According to the market sources, mills and exporters refrained from making new deals after holidays and it is likely, normal activity may start next week. Other experts said that next week hopefully may begin with enhanced activity after the news that instead of Indian textile ministry, now the Indian Ministry of Commerce to make deals with foreign cotton importers to make the matters in regular and corrective way.
EU EXPORT CONCESSION:
Hardly had celebration and guesses how much the EU grace had earned as a consequence of agreeing to allow exports of textile products from early next year, and the entire mass was in WTO reviewing to give a positive nod. The EU had from its side decorated the gift for formal approval. The major constituents - Britain, Germany and France etc, were on the back of proceedings. If anything in shape of some reservation was from one or two states with little or no power. At least no one had imagined for a while that a neighbouring country India will nearly blast the whole exercise that had taken nearly four years to take the shape now being examined by the WTO.
In fact after nine week the mass of concession was in the arena of WTO. Opposition has been voiced the relevant quarters have not come out with for or against feeling, rather, full hope had been attached as the grace had aroused out of the flood damage, which carried roads, houses crops away. After damaging effect of the opposition, the celebrations have turned into something like disappointment.
The WTO chief is from the EU, who is sympathetic to poor sorts. The delay in completing the deal made the chief very sad because poorer countries, he thinks suffer in WTO absence. The Pak exporters must have been in shock and disturbed. The devastation this country has suffered caused by floods is in knowledge of man with human feeling.
BEST COTTON SEEDS REMAIN A PROMISE:
India will be celebrating tenth year of BT cotton, which has made that country the largest exporting country only below the US. The American cottonseed attracted every country, which had textiles as one of the leading export, including China and India. Both the countries have experimented and enjoyed the fruits.
In Pakistan authorities have only been speaking locally that they will be having best cotton production in Pakistan. But at intervals some reports said BT cotton failed to give yield it has been in China and India. In India prior to introduction of BT cotton home textile mills would be fed well while exports were strictly after certainty that imports will not be required. Even today when country has produced in all 33 million bales against 2009/2010, 29.5 million bales.
Pakistan has plans to produce 20 million bales by 2014 but except around a decade back it produced close to the planned 20 million bales. Even during 2010-11 merely 10.1 million bales could be achieved. No doubt size of the yield could be more attractive around 10.5 million or more bales had floods not devastated the country and ravaged standing crops including cotton.
Once again loud claim is in the air, but how the same will end up a patient wait will show. The textile ministry's existence has reason to make relevant people bulging with optimism. But so far the going has not been satisfactory with a couple of odds lurking, as would be the case when commerce or finance ministry handled topsy-turvy.
TEXTILE WORKERS IN BD AND PAKISTAN:
Drawing oneness in the textile sector workers in Bangladesh and Pakistan is restlessness. In both places they work full time but remuneration in return keep them far from happy. Very recently both had to take to roads on different counts though. In Pakistan power and gas scarcity are keeping mills and work places closed for certain specified period (days). Very recently when some how wage earners complied with the religious obligations, they learnt that their work places are without steam and they will have to look for some job if at all.
For the reason stated above that industry was closed for gas supply was suspended. In Bangladesh, the other day, the workers were on roads demanding for their wages government fixed sometime probably in November and the garment workers had not been paid, the cause they had to protest and three of them laid down their lives.
Conditions of daily living are vastly different in two places. The wage earners here are paid Rs 6000 while in BD workers get (Taka 3000 equivalent to $43 per month. Primary reason for the rage leading to violent protest was they were refused the bill they should have been paid fixed by the government. According to the labour minister the temper was high because a man working (and gaining experience) for the last 20 years was getting same payment what any new comers would get. Some settlement seems to have been affected. Latest is that all manufacturing centres workers get restive and resorted work stoppage.
TAKE BACK GAS SUPPLY SUSPENSION ORDER:
While suspension in gas supply was being criticised by all, particularly the traders and textile exporters, business leaders expressed surprise at the prevailing plight said actually they were expecting good news on the part of SNGPL. But authorities had taken totally different step, which has left industrialists and workers in shock. They regretted that while efforts should have been made to improve the situation, it has worsened instead. It is not affecting industries alone but economy too which is in bad shape.
The textile exporters of Faisalabad protested from slightly different angle who are facing 90 percent low pressure in gas supply. They did not stop here but termed low pressure a deliberate attempt to shatter the export oriented textile industry. They saw the low-pressure tactics would inflict a loss of nearly Rs one billion daily. Exporters went ahead in criticising those gas managers who propounded the plea that supply was compressed due to cold weather.
The exporters went further in criticism and supporting their stance because firstly weather was not that critical where gas is fossilised. The critics urged the government to immediately intervene and do away with the problem at the earliest.