Nearly passive trading in NYCE and TCP entry into local cotton market both had combined negative effect leading to frequent fall in spot rate and in ready off take plus pleasant buying support. The spot rate closed down at Rs 2475 from beginning the week's journey at Rs 2525.
WORLD SCENARIO:
China keeping orders in low profile gave players no direction to apply on prices who waited for weekly export sales and monthly supply/demand reports to set market trend, which could only be expected on resumption of session next Monday.
Meanwhile May contract opened account at 53.93 and July at 55.23 cents a pound. All efforts failing to locate a direction, players practically surrendered to prevailing conditions until two government reports were released towards the close of the week. Thursday and Friday.
The trading seen during the week based on spec sales or fund buying and sales. Despite desired otherwise the speculators were looking to send contract south. The players waited for weekly export sales on Thursday and monthly supply and demand report on Friday.
The drought like conditions in West Texas where cotton production is highest remained point of concern. The session opened every day and closed without showing life in the trading. The contracts naturally found conditions unbearable and gave some grounds, or one or the other showing higher leading to end result as mixed. Towards the close the impatient players making forecasts. They said the USDA figures should show total export sales ranging from 200,000 to 300,000 RBs against 241,600 RBs. The shipments they saw 400,000 to 500,000 RBs against 452,900 RBs (500 lb).
The analysts however expect minor changes in Monthly supply/demand report. They said the only suspense was in world consumption particularly in China's consumption. On Thursday slight improvement was noted owing to combined option related and commercial buying.
The USDA weekly export sales had little impact on the trading. The report said sales hit 334,000 RBs against 241,600 RBs. Shipment amounted to 444,000 RBs versus 452,900 RBs. The monthly supply/demand report is expected anytime which is eagerly awaited but its impact will be evident next week.
Monday, the weekend trading climbed higher on speculative buying due mainly to support derived from USDA report on higher export sales and inevitable Chinese demand expectation. The May closed up at 55.11 and July 56.32 a pound.
LOCAL TRADING:
The TCP entry into the cotton market to unload its so called unsold stocks and inactive going on the NYCE liberally impacted trading during the week where insipid condition prevailed.
The spot rate was changed in quick succession as major players were upset where the TCP dropped while earlier decision was that it was not going to sell to spinners and textile millers. The result was overnight decline in cotton prices. True, that TCP was not openly selling to local cotton consumers but its impact was predictable. Is it that authorities wanted ginners to shun piling up cotton which was staying around two million bales?
The fact remains that once local consumers declared to stop lifting cotton from ginners. The sellers will be out demanding from authorities to do something to save their skin. However, spot rate was changed the very first day and followed soon the other fall. By the middle of the week spot had come down from 2525 to Rs 2500. The rate in ready was seen at Rs 2250/2525 in Sindh and in Punjab Rs 2350 to Rs 2550. TCP auction is said to be on March 16, so both ginners and millers have to wait before they could plan their moves. Meanwhile, spinners and textile millers continued to lift. At times buying was seen around 8000 bales. Gradual decline in prices encouraged consumers to take advantage of the situation. However, ginners were not happy with the authorities decision to field TCP at this juncture when prices were keeping firm yielding sellers good return.
THEY ARE IN A FIXE: Should they wait for a better return meaning should they hold over the stocks?
The buyer again was hit by hypocrisy, as they just sidelined to watch from distance whether ginners are appreciative their stock pile and bring down prices further. The buyers were encouraged from TCP entry but the sellers were disappointed though, were up against the buyers and held back stocks. The substantial decline was marked by Rs 25 in spot rate. The ready price ruled in Sindh at Rs 2250/2525 and in Punjab at Rs 2300/2550 almost same from previous level. Not a single bale business transpired on Friday.
NYT COMMENTED EDITORIALLY:
Extracts lifted from NYT editorial on Bush's visit speak far more truth in what it said Bush should have granted Free Trade Agreement as it would have meant more jobs in textile factories in Pakistan. The FTA would have cemented the economic well-being of the average Pakistani to the well-being of the US. Instead Bush showered praises to hurt the feelings of the already ache-ridden two-dollar a day earning labourers. The NYT honestly commented at the moment fewer employed people on the street with nothing to do.
The last few months have been witness that right from commerce and foreign ministers to prime minister and the president had been advocating Pakistan earnestly needed Free Trade Agreement (FTA) which would not have been unprecedented step in the presence of such favour with Jordan, Morocco and other countries in the Middle East. The Pak textile exporters sent to the wall with the advent of WTO more challenges have lost heart and turning to government for survival.
When report were read in newspapers about likely signing of BIT (bilateral investment treaty), in some circles hopes were expressed the announcement about FTA has been held back to give an element of surprise when next morning Pak papers will come out with news that Bush were so pleased to sign the FTA agreement giving relief to government and official circles.
Now as Bush has signed N-deal with India, the FTA has gone back in the rear. President has been now trying to inject hope in disappointed Pakistanis that Pakistan has already enough capability to come with deterrence. President Musharraf should have instead held out assurance when the FTA is taking shape. Some frivolous voice has been heard it will turn a reality after a year. Bush, however, will not be president then.
PCGA STATEMENT:
The PCGA seed cotton arrival reports are released twice in a month - on the first and 15th, but - are published on different dates. The delay for the supply do newspapers are not furnished. The first of the month release should be in newspaper offices same day and should appear on 2nd. This arrangement will make studies and comments timely and regular.
The latest report was received in newspaper offices on March 4, 2006 (published on March 5). The report says country produced 12.306 million bales till March 1, 2006. But why the report was delayed is not given. In America government reports or USDA report whether its planting report or weekly export sales report are published on particular date but if there is likelihood of any delay reason is given such as president's day etc.
The production has been shown at 12.306 million bales which was quite often supposed to be unlikely. If any confusion crops up and later that is clear should also be given.
The crop committee, government's agency has its own source which surveys and calculates which is released. But others who consider themselves knowledgeable dispute figures, and stress so much that only they are correct others are supplying incorrect estimates. Such figures often prove misleading and unhelpful in planning. The current release has also briefly stated exporters bought 70,900 bales mills bought 10,495 bales. Unsold stocks stood at 1.667 million bales and phutti in hand was recorded at 0.730 million bales.
It should be appreciated if how much crop was in field or should be given when first picking started and when the last picking was expected or has been over.
WHAT'S IN A NAME:
What's in a name, had said some wise man in the long past. But today a name such as Q12s changed to RZs has not only some meaning but political connotation as well. However, if Pakistan export products will get free access in the US markets will be most welcome. The expectation is that export items, a list of which is being prepared will God willing well get freely into US markets. The textile products are particularly welcomed as duty make them forbidden fruit after advent of the WTO.
The reason why Bush has agreed to spare his people from 'terrorists.' The ROZs will be spread over in the nook and corner of the country particularly tribal areas. God help us in the zones taking a concrete shape has consumed over one year in proposing and acceptance take root. Far flung areas are full of naturally skilled men, women and children who have for centuries worked as slaves. The govt will have to carefully monitor such zones operated and served people who are known to be high minded.
Unfortunately or fortunately this was proposed by Pak authorities to the US officials that this is one way to question so called "Terrorists". President Musharraf had been repeating that a bread filled belly is an effective way to tackle violence and terror related incidents. The proposal should have come from President Bush or American officials on suggestion was in the air for long how to manage the wayward youngmen.
This would add weight to the scheme. Since it is a new proposed scheme will have to go under the process of legislation to give it legal effect. The first name Q12s could have been effective instantly but the name was given to the facilities given to Israel and Jordan. Though the changed name has been readily accepted but it will have to go through such process which also has some element of, God forbid, doubt.
However, topic has been discussed and accepted by top executive of the US, seems scheme in all likelihood will get the required vote. If the primary process has been met smoothly, its finances that has been linked to broader Middle East and North Africa (BMENA) Initiative.
The scheme has already been old by one year and some months have yet to pass by when Bush having completed his second turn will have to handover the administrative to some new comer. The slight apprehension remains about the scheme's fate. The name could be changed because it would have automatically come under Q12s or would instantly be effective by president, who understands why had he agreed. Now when a new comer takes over will change the policy. God forbid, so happens. This uncertainty demands: Make Pakistan strong enough to be self-sufficient as far as practicable. What neighbour got should sound a strong warning!
KNITWEAR SECTOR WON'T FALL SICK AGAIN:
Action plan has been initiated so quickly to remove knitwear sector constraints could be attributed to the existence of textile ministry. It is now hoped that knitwear sector will quickly be brought to life and stay healthy to serve the interest of the runners, economy and country. The record of falling sick by one or the other sector in textile business is not rare.
The govt has been tired, said circles close to textile sector, so the banks in offering them oxygen mass. A couple of years back bank turn shy to finance projects which were not as viable as they should. Out of 400 or so textile units, sources said, dozens of units had not given adequate to stand on their feet and started operation. Since textile ministry is working it is hoped proper care will be taken to keep units in operation viable and kicking.
They said in the past causes for falling sick was not traced. At least there is apparently any record. Therefore the onus has fallen on the full-fledged textile ministry. The mills set up with govt money or even any private sector people should have stake in them, be in the know-how and stamina to work hard to support the exchequer by monetary contributions. The govt has been aware of the draw backs country is faced with. But let not that be a lasting phenomena, they said.
The recommendations like transparent mechanism, to ensure smooth refund of sales tax, land offer in textile city and garment city, the EPB has been urged to locate new markets particularly in ASEAN, China, Japan, South Korea and in OIC countries. Cheap labour if not available locally it was suggested hire from Sri Lanka.
The EPB chairman offered warehousing facility at Karachi at nominal rate. It was not clear where investment will come from, it was obvious though. It is hoped constitution of committee will lead to some useful outcome for the knitwear sector the competition under WTO rules will remain and the manufacturer will have to make products quality and pricewise to face China and India.
TAIL PRIECE: Concern has been expressed that the cotton growers (peasants) are switching over to the cultivation of sugarcane for more gains, which could hit the textile industry. Concern about all stakeholders was also shown to create a win-win situation for everyone involved.
The knowledgeable circles welcomed the concern equally for all players but asked what if growers (peasants) increase per acre yield will they be able to rub shoulders with high ups in twin city - Pindi-Islamabad. Again if the growers (peasants) take upon themselves onus to enable textile industry to run uninterrupted will growers (peasants) he rewarded a VIP place on country's airports and any place of honour, they asked. They said its but natural for them to switch over to any crop be it sugarcane, wheat or any. Restricting cotton growers (peasants) to produce cotton to serve textile industry what they have been doing over decades. But has the prosperity the two enjoyed has any comparison? They asked.
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