The supply of phutti maintained smooth flow, despite such reports as to have adversely impacted on cotton trading during the week ended on September 10, 2005. Spot rate fluctuated both ways during the week to show no change at Rs 2125.
WORLD SCENARIO Speculative short covering pushed futures on the higher side, besides players remaining upbeat about export sales and September supply/demand reports. October contract opened at 51.25 and December at 52.88 cents a pound with one day remaining closed on Monday.
The session of the week opened on Tuesday as futures ended firmer on speculative short covering, with follow through interest seen nudging the market higher this week. Monday was a holiday closed on Labour Day. A trader hoped cotton will likely be higher on follow through speculative buying.
Fundamentally market players are waiting for the US cotton crop to begin harvesting shortly, and negotiation between China and US and the EU. The futures sustained firmness banking on speculative short covering.
Fundamentally, traders were keeping an eye on the development of the US cotton crop. Conditions in China were also occupying the attention of the trade. The trade is waiting for Friday export sales report and September supply/demand reports.
And, once they got the two reports, they will switch to harvest pressure and this could cap any further advance in cotton, traders said.
Indeed which is players major interest is news on talks to resolve a textile dispute between China and the US, specially after the European Union backed a clothing deal with Beijing. In view of the good news leading brokers saw resistance in the December contract at 53.25 and 53.80 cents, with support pegged at 52.80 and 51.85 cents a pound.
On Thursday futures turned lower amid a drumbeat of speculative selling although most of the trade setback ahead of the release of two important govt reports Friday and Monday. Besides the two reports, focus will also remain on the strength of demand (August-July) and how much damage Hurricane Katrina inflicted on cotton areas.
However, speculators have been lightening up before the two reports. Meanwhile talks circulated in the market of sizeable sales to top consumer China, although confirmation of the speculation was hard to come by. Friday was marginally lower on sales by small speculators as major players waited for the Monday's key govt crop report.
Most analysts believe that the USDA will raise its estimate for US cotton production from last month's 21.29 million bales due to near ideal growing weather in cotton belts .On Friday October closed 50.05 and December at 51.95 cents a pound.
LOCAL TRADING Trading opened on Monday quite fast on perception of prices to taste a dip due to expeditious phutti supply position. The spot rate was briskly down to attract buying fearing any slow down will only help stocks pile up. Thus ginners used wisdom and pulled down double of the trend ie Rs 50, without upcountry expenses.
However, spinners and textile millers applied wisdom to buy cotton fearing adverse news could send prices higher. The cotton futures in New York had been keeping firm. Nearly 3000 bales were lifted at prices ranging between Rs 2100 and Rs 2200.
The govt who is sensitive to cotton market problem and monitoring the trend announced it will ask TCP to enter market to stop setbacks. It worked spot apart in ready offtake prices showed firm trend. Phutti had instant gains of Rs 10-15. Buying sustained on the market and consoled the setters.
The TCP with its new chairman just installed started making preparations to enter market instantly. The third session saw spot price recovering soon. It was raised by Rs 25 to Rs 2125. It was required following movement in New York cotton and thinking in local cotton market. Buying was hit but buyers kept an eye on the development and ready to act.
The world prices were aiding cotton prices in Pakistan. On Thursday spot rate recovered fully as it was raised by another Rs 25 to Rs 2175. The phutti supplies remained high but the TCP factor and reports showing world rate keeping firm have helped. The ginners were blessing themselves for risking stock that was now paying.
In ready more or less 7000 bales changed hand good quantity from recent days trend. The consumers are taking no chances, as contradicting reports about cotton crop were every alternate day matter. Believing in those or rejecting them altogether is risk full.
The spinners and ginners therefore prefer to buy as long as the rate is within their parity. On Friday the leaping stride failed to sustain: Nationwide strike took to trading toll. Keeping in view the sluggish scenario due to disruption in transportation the ginners had pulled down the spot rate by Rs 25, but it could not boost the cotton buying.
Spot was cut to size and it was Rs 2150. However, declining trend attracted buyers who bought big lots about half a dozen.On Saturday, phutti prices steadied on heavy rain in the cotton areas in different parts of the country.
UNTIL MILLS PAID None had expressed so vividly as the Federal Minister for Food, Agriculture and Livestocks Sikandar Hayat Khan Bosan that until the mills paid good price to growers (ginners) for supplying contamination free cotton, nothing will induce growers (ginners) to make additional investment. During commerce minister Usman Dawood period he had offered incentives and even much earlier some ginners had tried their luck by spending on lint-cleaner (probably a machine that cleaned the dirt) but had to abandoned determined not to listen to dictates of authorities or the reason.
The ginners has since then called loud to stay away from producing contamination free lint as ginners had to embrace the price millers paid for ordinarily ginned cotton. Reason: Somewhat Bosan has tried to convey people who today need more than ever to stay in the now most competitive world markets to lead. May be if ginners (growers) listen to reason, country could save annual loss of five cents a pound of cotton.
Besides, quoting higher for one pound of value-added goods such trousers or shirts will be welcome. The meeting took immediate notice of over Rs 100 decline in cotton prices and announcing govt won't leave growers (ginners) on the mercy of the market forces, but would rather induct Trading Corporation of Pakistan (TCP) to buy cotton stabilise the prices.
If cotton prices are being monitored fair enough in declaration of fight against exploiters. It will be noted by varied cotton interest to note that a responsible minister observed on good reports that weather was favourable for the crop as days were warm and nights were cool and there were no reports of pest attack so far from any area.
The following statement that 450,000 would be lost due to damage of 300,000 of acres of cotton field in Punjab following rains appears somewhat contradictory. But he hastened to ail the sinking growers heart that loss would be compensated due to rise of 02 percent in total area under cotton cultivation estimated at 3.2 million hectares.
Growers are ever ready to come up to expectations of the authorities and cotton consumers but ways are found to pay them below than investment level no matter crop is bumper or depicts shortfall. The authorities must know where and how growers are duped despite deserve to serve their interest well!
SOLUTION DEFERRED The textile products exporters in every country must be pretty harassed to learn that Chinese President Hu Jintao's visit to Washington has been postponed. REASON: Bush will be engaged in coping with massive damage caused by Hurricane Katrina. People see the catastrophe had highlighted the vast RACE divide, in the United States.
Not easing postponement and humanitarian grounds China has announced dollar give million in aid for the victims of Katrina, in addition to a batch of emergency relief goods. Besides, the announcement said it would send rescue workers including medical experts.
The natural calamity preceded the meeting of the two leaders who were besides other scheduled agenda were expected to discuss and perhaps resolve constraints caused by imports of textile goods, particularly brousers and garments. The interruption has come when half a dozen meeting did not lead to any breakthrough. American manufacturers have been clamouring to halt Chinese aggressive exports that had disrupted market conditions.
The Chinese authorities had agreed to export just 7.5pc annual rise ahead of joining WTO. Now as the Bush/Jintao's scheduled meeting has been postponed and British Prime Minister Tony Blair with EU authorities was in Beijing thrashing out problems which are less likely to see the dawn agreement on dumped textile goods since been reached.
The problem is not as simple as the textile exports by China to US or the EU but dozens other junk gathered before and after Tunnamen Square, embargo and sanctions, Human Rights opening the Chinese markets for the world banks. In a way the suppressed decades old desire would be given vent in Monday (September 5) meeting and beyond.
The China is facing such big question expected expeditious solutions. Ordinarily the EU manufacturers are agreed the EU manufacturers to free the Chinese goods lying in various ports. They also appreciated China was doing more than enough to implemented its WTO commitments on time and in some instances have been ahead of time. But authorities are using all at a time for pressing to open Chinese markets keeping yuan afloat and banks intended to work in China if given a level playing field.
TCP RE-ENTRY Who received the jackpot from the TCP induction during lean period and who in future will receive the windfall should thank God, the knowledgeable sources welcomed recently cautiously. They must also pray that growers, particularly the less fortunate ones, also are blessed with good return of labour and their investment, tax payers quietly bear the stake.
These people who actually till the land, water it, uproot the mushroom plants and treat the suffering crop until the harvest period reaches safe from rains, floods and pest attacks. All these weeks and months they never had what is a restful sleep. These people do not know how much TCP receives and whether everything went nicely.
This season 2004-05 the TCP saw an abrupt end of its noble service an international organisation based in Liverpool, under certain rule barred it to carry on with the job when it was most needed. Once again God was kind and merciful, as cotton field presented a look of over flowing cotton boll. But when decline in cotton rate became pronounced authorities committed to the well-being of the grow on announced TCP won't see prices go down the drains.
The Corporation still has some 400,000 bales of cotton with it was asked to offer through tender for sale. The cotton spot rate going down every alternate day had recovered half of the by an Rs 50 jump, showing it holds the trump card to stabilise the cotton prices.
This is for the short term but what the tax payers silently bear would like to know, circles said that at the end of the day whether TCP would earn or stand loser! The TCP predecessor cotton export corporation, sources said used to sink the money for other them the help to the needy.
The account of expenditure and profit must remain in the knowledge of those people whose money actually is drained out. Generally ECC or such bodies give only the name of mega projects and is forgotten.
Sources regretted how the project was treated during implementation period, seem no body's baby that was.
They suggested that what should be in the uppermost in mind of authorities the responsible planners expect highly credible data to contribute positively on his part for growth, and progress of the country!
TAIL PIECE: A meeting held the other day turned pretty important because if formed a special committee to prepare for strategy to obtain contamination free cotton from growers and ginning industry as part of clean cotton programme.
The strategy to get dirt-free cotton from ginners in understandable but dirt-free cotton free from growers direct is uncomprehensible. Is it that textile ministry is planning to buy, hire and set up a ginning factory to clean the seed cotton from the field.
Seed cotton or phutti the ginners buy from growers and gin the same in machine become clean that might be supplied to mills for value-addition. The concern of the commerce ministry is valued as without supplying contamination free cotton to ginners and ginned cotton to textile mills have failed to produce desired products to match world product.
The efforts, rather enhanced efforts should kelp create a contamination free cotton culture. But it will take another century due to hardened egoism. Authorities have to take care where the egoism has persisted for half a century.
G-20 meeting participants had to face a loud banner: Stoprigged trade rules and double standards in WTO story next week.
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