Cotton trading in local market last week was influenced by phutti arrivals statement, the ongoing WTO moot in Hong Kong and the buyers' interest. The spot rate got a raise on the opening day, and was last quoted at Rs 2400 per maund.
FOREIGN SCENARIO:
Several factors impacted cotton futures on New York Cotton Exchange (NYCE) leading to both ways fluctuation during the week. There were speculative sales or buying, and fund buying. The WTO moot in Hong Kong was eagerly watched as the subsidies issue and import tariffs directly related to cotton world-wide.
The outcome, however, was not expected until the end of the week-long serious talks. The supply and demand release was also expected, which enables the players to determine the direction of the trading pattern, as the figures show how to tackle the trading.
However, the opening session was firm as speculative sales and fund buying injected life, though temporarily. Market analysts were reluctant to say anything with certainly but thought that futures market would be firm, or could be higher around 54 plus cents.
Chinese requirement and expected orders up to 16.5 million bales showed the growers and traders a ray at the end of the tunnel.
China is the largest producer and consumer of cotton. But reservations on the part of America about Chinese apparel and textile exports had angered China. However, some discussion had taken place regarding exports until 2008.
The moot at Hong Kong did not speak about outbreak three days after talks had begun. This had intensified apprehensions by top WTO members of the 149 so far.
Weekly sales were another point awaited. They expressed optimism as they expected export sales to range from 300,000 to 450,000 bales against last week's 465,800 RBs.
Shipments ranged between 250,000 and 300,000 RBs. The WTO conference result wait had created a sort of holiday mood. Demand for cotton was high, which is normally cherished. But players were unwilling to press futures higher due to the absence of any news with market substance.
NYCE futures rose on the week-end session, when March was seen at 53.01 cents and May at 53.76 cents per pound.
Market operators now take note of coming Xmas holidays.
LOCAL TRADING:
Prices in local market maintained surge, and buying at times seemed to be running ahead as PCGA seedcotton (phutti) arrivals report was expected to show shortfall during the week. The prices ranged between Rs 2250/2350 and Rs 2400/2425 per maund. Spot rate was Rs 2375 until on the very opening day spot stayed put as the market eagerly awaited the PCGA report. Spinners and textile millers awaited news to give a perfect direction.
The second day's session was marked by raise in official spot rate by Rs 25 to Rs 2400. The asking prices remained almost unchanged on speculation that PCGA statement shortly would show shortfall.
Ginners' stern decision showed that they were in the know of things, and buyers' continued buying also spoke of the urgency the buyers attached to the available stocks. They, however, apprehended ginners' unpredictable attitude.
On Wednesday, modest buying was seen due to impression of rise in prices. Buyers appeared disturbed at the state of trading. The ginners had sufficient stocks to lower the prices but they were not doing so. Actually, the reason was that TCP was still sitting away, signalling that intervention time had not come.
Meanwhile, 'neater' cotton in Sindh was matching in price with Punjab. Seed-cotton prices were seen at Rs 900/1100 per 40 kg. It was rumoured later during the day that TCP was considering to intervene in the market proceedings.
On Thursday, business seemed dull though a few lots were lifted. Both sellers and buyers took to sidelines until the PCGA statement would be released. Official spot was unchanged at Rs 2400. Nearly 4000 bales changed hands at Rs 2400/2425.
On Friday, spot rate remained firm, and prices in ready also remained more or less at the level Rs 2300-2425. The spectre of PCGA and intervention by TCP remained to be seen for next week. Though WTO is not a front ranking factor for Pakistan, its negative or positive results would have effects world-wide, more so on the African countries.
INDIGENOUSLY BUILT MACHINE:
Bahawalpur's Bismillah factory earned laurels for being the proud owner of first indigenously built ginning machine. The qualification of the machine is not backed by result when first subjected to test. Yet those who planned and executed should be congratulated for envisioning, putting an idea into practice and finally installing at a ceremony.
Incidentally, the report spoke of three options before the government, but the choice fell on to developing a modern and standard ginning machinery locally. Will the government ever think of producing textile machinery to make textile products cost-effective, and units to produce chemicals and dyes to make textile products more colourful?
The news source was somewhat miser to give further details as to how much the machinery had cost and how much foreign exchange had been saved year after year. The report would have been more welcome if the reason had been why building of the machinery locally was thus far considered a forbidden fruit.
Some bold thinking and determination is required to prompt somebody to manufacture textile machinery to get rid of the textile sector generally of used parts and machinery according to the experts who said in likewise manner wisdom will dawn one day.
Every day import figures handled at the two seaports showed imports at 167466 tons and exports just 4263 tons. There is no comparison between the two. Every time trade deficit is shown at higher level all sorts of machinery, particularly textile machinery, tops. Pray, like ginning machine, textile machine is also installed in one of the scores of textile units!
WTO: SIDELINE STORY
It became awfully unbearable to just watch how WTO key conference began in Hong Kong and ran towards its closure--with success or otherwise. So the following two things boggled the mind--HK shares (not human beings) and 15 million cotton growers in Africa and more elsewhere were unaware of what the conference had in store for them. They were on the brink of replacing cotton with some other cash crop.
An AFP report from Hong Kong predicted share prices were likely to trade narrowly as talks went on and fears of possible agitation and violence. And, hundreds of miles away, in the East in Africa, according to a report, Lefara Soro told Reuters he knew nothing about the debate ranging over subsidies paid to rich nations to his competitors half a world away. The cotton growers of Africa were unaware of the war that sympathisers were waging for the last 40 years.
They were not without voice weapon but the proponents of democracy were blindfolded, tightening their belt to zealously preserve the already high standard of living. Cotton industry was going through Hong Kong proceedings to resist any attempt in talks that it be singled out in the thorny negotiations over farm trade. The cotton industry, the beneficiary of the subsidies, was not alone but stood behind 30 US legislators.
On the one side was this force, and on the other the EU Trade Commissioner, Nelson Mandela, accused of going out of mandate in offering concessions, France is firm to veto the moment news about any further concession flashed across the world.
Cotton grower Soro in far off Africa stands in his field where cotton was being harvested to be sold at throwaway price. Free trade campaigners say like Soro thousands in nearby Mali, Burkina Faso, Chad and Benin were forced to sell their cotton cheaply to compete with the large Western farms, kept afloat by state subsidies. Soro earned last reason a meagre $180 profit.
The Saturday report said that LDCs, particularly the cotton growers in Africa, would get something. However, a delegate pooled courage to say that "progress on the issues is very technical and may not be for general public".
SAUDI ARABIA JOINS WTO:
Saudi Arabia formally joined WTO on December 11, 2005, as 149th member for remaining in the mainstream with the global community after 10 years of haggling just before commencement of Hong Kong meeting. WTO rules have yet to establish and member countries have to guard whether WTO rules stand by it or demanded more than what it delivered.
Earlier, the kingdom was admitted to the WTO in November 2005 and finally became part of it a month hence. The kingdom is a heavyweight as was termed by the chief of the global organisation Pacal Lamy who welcomed a very important member of the organisation, which sets the rules for global commerce. Saudi Arabia is the largest oil producing country and a leading member of the Organisation of Petroleum Exporting Countries (Opec).
Had the hassle ended successfully the kingdom would have been a year old in the WTO.
However, better late than never, Saudia Arabia joins WTO just two days before HK important conference on December 13. As the practice goes, the kingdom had undergone the exercises to open up concessions to its main trading partners like USA, EU and Japan etc who is assumed by exports would be the major gainers. The concession includes cutting customs duties. Saudi Arabia sets the trading and price in oil business.
However, all eyes were set on Hong Kong week-long (December 13-18) meeting in Hong Kong whether it ends up with hope for the 1.2 billion hand-to-mouth people the world over, or, as the EU Trade Commissioner Peter Mendelson had opined that "we don't want to pull out of the talks and certainly don't intend to, but if this round fails, I think the possibility of restarting a further trade round is way away into the future".
All top people have expressed their feelings whether Hong Kong meeting would solve the lingering issues left over by the Doha Round in 2001. Only a miracle can save the talks from failure, as all major stakeholders, like USA, EU, Brazil and India, have talked merely about their own interests rather than opening their heart for those who need two square meals.
DON'T ASK TO PAY FOR FAVOURS:
Up to December 16, four days after WTO Sixth ministerial moot began in Hong Kong, nothing had emerged, as was expected to the extent that Malaysia saw the moot end good pretext for shopping by the delegates. The pertinent question was: are rich nations responsible for the poor the world over, more particularly in some countries like Africa.
Hasn't Africa some very rich people? How could they be so? The rich countries promptly give food aid, money what rich could easily part without staking their own people. Do the beneficiaries of these aid get enough to say loudly: "We don't want dole; we want level playing ground in global trade and commerce?" The rich countries, notably the US and EU, have perhaps never ignored countries hit by quake, floods and the like tragedies.
But, probably they never did so at the cost of their own people. It is here that over four decades have been consumed in useless debates and discussions while the poor kept waiting for the dole coming from sixth 'very important moot'.
Developing countries must have learnt, perhaps with shock, that they have always topped the world in corruption. At the end, they may toss some surprises for the poor they are expecting.
Maybe not exactly the so-called developing countries but so 'coined' by the 'proud' rich, LDCs get what the rich they can spare for the 'dole.' Maybe cotton growers in Africa get as much to be able to feed their loved ones. A campaign has lately been heard and seen that LDCs won't have to pay they accumulated through the years.
A report on December 16, originating from Hong Kong, says that the G-20 has urged EU policy makers to agree to constructive reforms without asking developing countries to pay for favours. The latest until Saturday a report described goings in HK as no breakthrough and no breakdown!
LATEST LOCAL SCENARIO: On Saturday the latest seed-cotton arrivals figures released by Pakistan Cotton Ginners Association showed nearly 10.0413 million bales, indicating rise in production against last year's about 11.04 bales.
According to Naseem Usman, Chairman of Karachi Cotton Brokers Association (KCBA), rising trend in the arrivals figure was giving an indication that this factor may help in exceeding the revised target of 12.5 million bales for the current season.
He said that this factor might cause erosion of Rs-25-50 in the current prices. Additionally, unsold stock of nearly 2 million bales of cotton would be another added factor behind less buying interest by mills.
TAIL PIECE: Once feeble voice was raised, but was never given any importance, that other than textile sector was brought into fore and developed. The voice was heard when cotton growers and ginners got encouragement from officials to be rewarded with good return. The lint was not to be made available at throwaway prices to produce cotton yarn of low count. Today, the textile sector is kept in high esteem, as now it is openly claimed that there is high growth potential in textile sector.
Only recently seed-cotton and lint procurement prices had been raised and a premium of Rs 100 was also available to contamination-free suppliers. The government has turned very sensitive in respect of textiles and has prepared a package of incentives for quality cotton production and standard ginning. Under the package the grower who will deliver good quality seed-cotton will be given additional Rs 50 per maund.
Similarly, ginners will be rewarded Rs 30 per maund for polishing the cleanest possible phutti. The textile associations have been keen to devise their roadmap for enhanced contribution towards strengthening the tattered economy for over half a century. Let the buyers also patronise the cotton supplied to them with 2.5 gms to the most.
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