Cotton prices drift downward on domestic market, globally rate keep on fluctuating both ways

Week saw downdraft in cotton prices despite world rates fluctuating both ways, though buying level stayed low. Spot rate drift downward began on the second day, while it was slashed by Rs 500 to Rs 9000 and the week ended at the same level. Other important development was the start of dealings in new crop i.e.2011-12 season.
WORLD SCENARIO
Cotton futures prices are fluctuating both ways, gradually coming down and players are trying for middle course to keep cotton respectable. While political and natural calamities raging the world, normalcy return seems distant. The United States has exhausted cotton stocks, China gradually digested. But the world has enough supplies with Brazil, Argentina and Australia.
The cotton growing countries, almost all, leading American have planned improved acreage for plantings. They, however, confront harsh facts - in Texas maxim cotton yield is faced with drought where rains are being prayed in week's time to retrieve some crop. Texas is maximum cotton growing area, if damage to cotton is colossal, much worse days ahead could be expected from the flood being presumed to come through Mississippi compared with 1937 flood.
Pakistan is in deep trouble and trying to manipulate things so that India could be persuaded to deliver nearly 1 million bales due yet. India is also being approached to let the EU trade package be cleared. Meanwhile, nothing is being heard about cotton from Uzbekistan. Spinners have lately indicated they are closing down units.
On Monday the benchmark US cotton futures tumbled amid professional sales, a brief recovery late last week and opening the door to further declines this week. Dealers said selling by investors and producers was behind the drop in the benchmark July cotton contract on ICE Futures US, which ended down 3.57 cents, or 2.3 percent, at $1.5445 per lb. New-crop December cotton fell 3.87 cents, nearly three percent to $1.2706 cents per lb. Volume traded was almost 11,000 lots, over 50 percent below the norm, Thomson Reuters preliminary data showed. The level of investor interest in the cotton market is at its lowest level since July 2010 before futures embarked rallied to record highs in early March. Open interest on Friday fell to a 9-1/2 month low at 153,644 lots.
On Tuesday the US cotton futures finished higher on investor buying inspired in part by floods in parts of the US Delta, and drought in Texas provided support for fiber contracts. The key July cotton contract on ICE Futures US rose 3.06 cents to close at $1.5751 per lb, trading from $1.5356 to $1.4887 cents.
The new-crop December cotton futures added 1.31 cents to close at $1.2837 cents per lb. Volume traded stood at almost 11,500 lots, over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Despite Tuesday's surge in values, open interest in the cotton market dropped to 151,977 lots as of Monday, May 2, its lowest level since October 12, 2009, data from ICE Futures US showed. Open interest is normally seen as an indicator of investor interest in the market and analysts feel the falling level of such interest in cotton futures indicates that investors' appetite for cotton is flagging.
On Wednesday the US cotton futures finished sharply lower on investment fund sales, as the market got hit by a commodity-wide sell-off that could spill into the days ahead, analysts said. The catalyst for the sell-off was the Reuters-Jefferies CRB index, a global benchmark for commodities, falling almost one percent for a second day in a row on Wednesday, after a sell-off in oil and most raw materials. Volume traded stood at almost 9,200 lots, almost two-thirds below the 30-day norm, Thomson Reuters preliminary data showed. Despite Tuesday's surge in values, open interest dropped to 149,384 lots that day to mark its lowest level since October 2009, data from ICE Futures US showed.
The market will now look toward the weekly export sales report from the US Agriculture Department to gauge demand for the fibre. Volume amounted to 14,166 lots as of May 3, up from the prior tally of 12,623 lots, ICE Futures US data showed.
On Thursday the US cotton futures finished near a three-month low on investor sales, as a commodity-wide sell-off undermined a wide variety of markets and the weak tone could last into next week. The Reuters-Jefferies CRB index, a global benchmark for commodities, was headed for its biggest loss in two years due to widespread liquidation. The mauling suffered by commodities spilled into stocks and crude, with oil prices stumbling six percent as doubts over the health of global economies spread like a contagion. "It's an outside market beat down," said Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas. "This is the undertow of all these outside markets pushing cotton down a rat hole." The key July cotton contract on ICE Futures US fell 4.65 cents to settle at $1.4686 per lb, trading from $1.4451 to $1.515. It was the lowest close for cotton in almost three months, Thomson Reuters data showed. The new-crop December cotton futures lost 3.51 cents to close at $1.2208 cents per lb. Volume traded stood at almost 20,000 lots, about a fifth below the 30-day norm, Thomson Reuters preliminary data showed.
On Friday the US cotton futures finished mixed, as the market appeared to be stabilising after a savage sell-off in the commodity sector over the last few sessions. "Cotton's trying to hold its own," said Mike Stevens, an independent cotton analyst in Louisiana. "It's stabilising, but the interest on a Friday is at a very low level." The key July cotton contract on ICE Futures US fell 1.30 cents to settle at $1.4556 per lb, trading from $1.438 to $1.491. It was the lowest close for cotton in almost four months, Thomson Reuters data showed. The new-crop December cotton futures rose 0.21 cent to close at $1.2229 cents per lb.
Volume traded stood at almost 12,000 lots, around 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Traders said investors were unwinding positions in the benchmark July cotton contract since old crop supplies are practically gone and turning their attention to December, against which producers will price the upcoming 2011/12 cotton crop. They added that consumer demand has also started showing up in the December contract, lending support to the market. The market will be looking for leads next week on buying intentions by mills from China, the world's leading consumer of cotton. Open interest in the cotton market dropped to 148,291 lots, as of May 5, the lowest level since October 2009, from 149,172 lots in the previous session, data from ICE Futures US showed. Volume traded in the cotton market was at 10,679 lots, as of May 5, versus the previous tally of 10,679 lots, exchange data reported. Steamed beans may sour record coffee price gap
LOCAL TRADING:
Dullness all round was marked on the cotton market where buyers preferred to watch price trend from the sideline. As a result the sellers restrain themselves and maintained spot rate at Rs 9500. In Sindh and Punjab phutti rates ruled at Rs 2500 and Rs 3000. Only 400 bales of cotton were lifted in between Rs 7,800 and Rs 8000, depending on quality. The cotton prices jumped overnight, market major players, however, expressed against the jump expecting downward drift owing to demand seen gradually lowering for upset in the north of Africa, Middle East and Japan.
On Tuesday spot rate was slashed by Rs 500 to Rs 9000. The world rates are impacting sellers to keep rates easy so that buyers are induced to ease their tough instance. The last PCGA arrival report was issued, which will give clearer idea about availability and price. Phutti prices ruled around Rs 2500 and Rs 3000 depending on the quality. Some 7000 bale of cotton changed hands in price range of Rs 8000 and Rs 8500.
On Wednesday prices showed downtrend, as spot rate was stayed put at Rs 9000, phutti prices in Sindh and Punjab ruled at Rs 2500 and Rs 3000 depending on the quality. The rate came down, operators said as better sense prevailed on the sellers to sell in view of the manageable stock. However, only 2000 bales of cotton changed hands between Rs 7400 and Rs 8500. The yarn makers were seen somewhat in trouble as import orders from abroad are silent. The authorities should look into the matter keenly why spinners are floating idea of closing down units.
On Thursday prices depicted further decline in ready while spot rate stayed put at Rs 9000, phutti in Sindh and Punjab showed no fluctuation. Nearly 2600 bales of cotton changed hand being week's highest in one day so far. Local condition was affecting cotton rate, as arrivals pace remained steady. World rate on Thursday nose-dived compared with three months low. Meanwhile, cotton growers cherish to reserve more acreage for raise, but natural conditions are coming in the way like drought and floods.
On Friday business activity was modest, as mills reluctantly making new deals of fine quality because they are very confident of fresh decline in the rates. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 9,000. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business over 3000 bales of cotton changed hands between Rs 7200-8500.
On Saturday steadier trend was seen following the news that the Securities and Exchange Commission of Pakistan (SECP) allowed future trade in cotton and the news that India would fix quota on cotton yarn export. KCAs official spot rate was unchanged at Rs 9,000. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business, more than 4000 bales of cotton changed hands between Rs 7000-8500.
INDIA'S SUPPORT SOUGHT FOR EU TRADE PACKAGE
The meeting on the occasion of World Cup in March between top two of the two countries should have been consumed a bit to drop a hint to the Prime Minister of India about the lurch the EU trade package facing due to supposed road block by India. However, the loud mention on the occasion of trade talks between India and Pakistan is appropriate occasion. India's of repeated move to give it most favoured nation status may prove to be heavier against asking favour to get clear EU trade package in WTO.
The talks initiated after break of nearly four years naturally have back log of host of core problems related to AJK, Siachen, rivers water sharing, no water when Pak needs are abundant and devastating floods when a drop is not required. Unfortunately Pakistan neither built dams, nor canals and needed reservoirs. No fewer problems are smuggling causing legal trade worth just two billion dollars. If taken seriously the loss is enormous and always gestured authorities came forward with pragmatic solution so that loss is estimated as the talks progress more issue are likely to be taken up what the authorities of the two countries are to be alert, that nothing minor or major intervenes and spoil the talks until all is well at the end.
Let the major event marvelled the world the other day proves harbinger of listing peace, prosperity and understanding between the two otherwise apprehensive people.
YARN PRICES DECLINE, LOOK FOR CURE
The yarn makers have claimed 30pc decline in exports, touching down to 16,000 ton in March 2011 against average export of 45000 ton monthly in corresponding period of last year. Strong perception is that yarn prices have come down abnormally against the price level of regional competitors including BD, China and India. Whereas, the price of 20 single has been reduced to Rs 117 per lb against Rs 250 per lb earlier.
The market is gloomy and trade trends are under extreme depressing mood, distressed industrialists said. They have been pointing out dozens of units spinning yarn have closed down and quite a number of others are on the way of closing down. Referring to other factors causing such plight of spinning mills, they further pointed out that recent imposition of six percent ST on unregistered domestic buyers by the FBR, a strike from the sizing industry, load-shedding in weaving and spinning sectors and non-availability of raw materials are the fundamental factors behind the present price cut.
This is the version of the industrialists. The official circles and the people in the textile ministry should remain in touch with the industrialists international scenario, particularly in the rivals like BD, China and India so that steps are planned to make amend. However, spinners own reading is that not Pakistan alone, but depressing situation is prevailing internationally. They see a price rebound is very much likely with start of buying by China as soon as China is in control of inflation.
COTTON YIELD ENHANCEMENT WITH US AID
Many must have heard this part of Indo-Pak sub-continent produced agricultural products much more to be proud feeder of most of undivided India. Partition done in a dubious way deprived two parts of this country after partition wheat, rice and sugarcane while erstwhile East Pakistan rice growing fields and mills went to Indian side. Today the dedicated growers this side are victims to owners big land holdings who exploit bonded labours without enabling them to keep land servicing to enhance output. The output of wheat or rice obtained in Pakistan is much less than in neighbouring countries. The funny thing is that know-how too, is lacking.
In order to make up the deficiency borrowing or accepting charity should be rather avoided. In over decades internal centre for agri research in the dry areas (ICRDA) should be self sufficient rather needed money or technological help in this case from USDA, ICARDA has been provided $1.2 million. This amount will be spent, if so, in this country, out of dollar 7.8m will be incurred in the donor and receiver country institution like PCCC, NI biogenetic energy, cotton research institute Faisalabad and NARC.
The germ plasma requires by Pakistan, have been selected and communicated to noted US scientists. The department of plant protection, Karachi has been informed about the import requirements. The first consignment of germ plasma from USA will arrive any time. The knowledgeable sources cherish cotton productivity effectively handled so that foreign aid is eliminated.
WTO ON BRINK OF FAILURE: CHIEF
Those philanthropics, who amassed wealth, and quite obviously were ashamed to "dump" the streaming without relent, thought of ways to earn mercy. But they were unmindful of a word that is interest erasing the smiles if poor ever have. Today those wise men have been given to bring back smiles on faces and two square meals have taken a decade without finalising the deal.
Almost half of the running decade is gone, but the majority weaving odds accumulated since the day one of the earth, have agreed on WTO talks are on the brink of failure. How disgusting and disappointing is such talks for the poor queuing in hopes for a better day, only they can surmise who have been for over a decade in wait.
They cherished the Doha Round of global talks aimed at expanding free trade have been like a dying sound coming from for distance behind. When the WTO was conceived there were two worlds developed and the poor world. Today some countries have emerged as immediately behind the developed world or are called emerging developing countries called BRICS - Brazil, Russia, India, China and South Africa.
The poor or poor countries have no place in the face of developed and developing countries below. The delay or constraints were actually interest, which exists always. Besides, the interests have been well served with so called BTA and FTA.