While the buyers waited for the fortnightly seed cotton arrival report, price jump kept them away from lifting during the week ended on May 16, 2004. Once raised spot rate was quoted at Rs 3000.
WORLD SCENARIO: Both July and new crop December fell, better with wider margin. However, interests had lost direction and eagerly awaited for supply and demand reports, export sales report, and China factor.
They were worried about the enhanced cost of seed, fertiliser, fuel cost and even irrigation charges.
The week opening day was softer after shooting up to its highest level. Since March 31, earlier in the session, but when the rally fizzled heavy trader sellers brought prices down.
Analysts looked for the new crop yield to be bearish for prices. They hoped an abundant crop is forecast. Rains have been falling in US cotton growing regions, assuring a healthy crop.
On Wednesday futures weakened amid option related sales in seesaw trading, with supply/demand report contributing to some weakness in the market.
Traders said the USDA data were just a starting point and growing conditions in the US and places like China would have to be closely monitored, separately some analysts were looking toward release of the weekly USDA export sales report shortly.
Cotton futures on Thursday finished firmer on trade and speculative short advance in the spot contract.
Analysts said weekly USDA export sales report was not a major factor in cotton although the figures were encouraging. The last trading day closed softer on speculative liquidation in two-way business with players uncertain about the markets move in the days ahead. One major merchant has been selling calls and buying puts in huge volume in recent weeks and is now being forced to buy those options back at higher prices.
The cotton farmers hold the view that profit will be low due to high prices of fuel, fertiliser and other agricultural inputs.
LOCAL TRADING: Patchy trading was the feature during the outgoing week when minimum lifting was registered. The primary reason why sales look hazy because of their keeping largely in the dark. This practice seen during this season is not without meaning.
The official cotton estimate and various interests estimate about cotton production differ widely. They said it does not appear ethical as it causes harm in some way or the other to the exchequer.
However, first days trading was not recorded because of holiday on account of by-election. On Tuesday also markets though remained open but void of any trading. In New York futures were down and sources said it so happened that when world rates go down buyers in Pakistan take time to see the trend in the market. The spot rate was unchanged at Rs 2950.
On Wednesday a couple of deals were reported. Both deals finalised were in Punjab cotton and at higher than ruling spot rate. It was maintained at Rs 2950. The two deals were priced at Rs 3150 and Rs 3200 per mound.
On Thursday the price hike feeler came from ginners who for raised spot rate of grade III cotton by Rs 50 to Rs 3000.
The futures prices were keeping generally low and spinners were indulging in go-slow-to a couple of deals if at all they felt like visiting market. Both the deals again were from Punjab at prices Rs 3125 and Rs 3100.
The by election and its violent aftermath and strike call etc had dampening effect on trading, including cotton trading. But the official spot rate was unchanged at Rs 3000.
Strike had telling effect on Friday in Sindh. Trading in other stations were reached late in the night though contacts yielded reply in negative.
SATURDAY'S: Trading was nil as spinners refuse to lift at the higher level. Spot rate was at Rs 3000. Sources hinted spinners have stepped up imports.
YARN PRICES: The tug of war between the users of yarn and manufacturers of the stuff has been long.
The question has been in the meantime offer raised Pakistan producing good/quality cotton should hugely go for making yarn? The local so callers are of course consumers of yarn and could be, they are not biased, biased but the foreign experts who have been invited to talk on the subject in seminars, work shops etc have expressed disappointment as to why should go for cheap cotton and beyond that grey cloth and subjected to anti-dumping duty.
The foreigners have not so openly asked, but authorities and rulers of Pakistan have spoken shyly as to why should total foreign exports should yield around 8 billion dollar.
The foreigners cannot go beyond suggesting to produce value-added products rather than yarn. But the situation has not changed even today when this government is trying to boost export target from just 8 billion dollars to 10 billion dollars. Current largest of exports has been rather ambitious but the earning so far is up beat and 12.1 billion dollar appears achievable.
The knowledgeable circles wonder if such low target as 12.1 billion dollar is not achieved. The circles stick to their old calls that the country should diversify its exports and switch over to value-added products rather than yarn.
Unfortunately source said that nothing can awaken this nation to walk shoulder to shoulder along the developed countries.
They said from our yarn several countries like South Korea has been earning 10 times more than Pakistan. Once again value-added product producers have complained about high prices and called for ban on exports.
The authorities are in 9 position to evaluate and decide what is in the best interest of the country.
COTTON POLICY: The policy before cotton sowing in even when it is in the process makes good impact if the same is there. Himself well-versed regarding cotton, Fakhar Imam, a former MNA has urged the government that cotton policy should be announced.
Although versions differ but it is a fact the sowing of cotton has begin in Sindh and in southern Punjab is proceeding fast. But according Fakhar Imam the government has not even outlined its policy about cotton. He reminds that outbreak of America and army boll-worms had caused damage to cotton. He must have thanked God for the situation that growers could get international prices in the country. It may be mentioned that cotton futures rose to 82 cents a pound that gave support to call cotton price.
Still he hopes situation will not be allowed to in 2004-05 year to suffer in similar way as circumstances are not always favourable. He cautioned the government that the situation does not revisit like the previous year when pesticides, cheap and unadulterated, were not available in adequate quantity, policy should be such that pesticides availability is always ensured as and when required.
Arranging its availability with our service should not be a practice. As in such cases required quality may not be there. Apprehending policy tilt towards interest offer he warned it should be to serve the needy farmers, in adequate quantity and required quality.
TAIL PIECE: Some moves textile sectors were expected on prime minister's hint that textile ministry needs were felt. But deep silence disappointed the cottons stakeholders who see a ministry will solve their solution.
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