Dull trading in cotton as buyers await fall in prices: Textile minister should explore Bangladesh market

The long wait for decline in cotton rates and small buying culminated in Rs 25 slip in the spot rate to Rs 2450, but the pace of buying was still slow as TCP came with clarification regarding floating its tender during the week ended on March 18, 2006. The spot closed at Rs 2450, Rs 25 down, on Friday.
WORLD SCENARIO:
The New York cotton market was still in wait for direction though contracts resisted significant losses as planting report and weekly export sales were awaited hoping desired turn in trading. However, May contract lost 0.87 cent to 54.24 cents a pound while July was also down 0.85 to 55.47 cents a pound on the opening day.
Analysts noted cotton retained considerable support from trade accounts due to the robust demand, especially from mills in China. The players keenly waited for annual plantings report from the USDA. Concerns over delay in rains were expressed, as Texas is the top cotton growing state.
Second session was slightly better as small speculators indulged in buying. But lack of motivating news kept the market confined to a trading hand for now, players said. The futures continued to gain for the second day running in quiet business.
Now with the spring planting and demand for cotton wait was added, along with wait for weekly export sales. Every day development in Texas was keeping hopes full. Dryness persisted when the crop needed moisture in the state which, if normalcy returned would improve chances for 20/21 million bales production.
Modest speculative sales stepped in to subdue the market, with analysts saying that the market seemed unable to break out of its trading band.
Meanwhile, the weekly sales report boosted demand for the fibre. The report said that total US sales stood at 465,500 RBs, sharply up on trade belief that it would reach to 250,000/350,000 RBs. The shipment hit 454,800 RBs--above trade expectations.
The last session saw futures dip, obviously for speculators indulging in sales and depressed dealings. Thus, the market will enter the next week with range-bound trend--a feature throughout the going week. Players said that demand remained food but sporadic with sizeable inquiries just below current prices.
The May contract was 0.43 cent down to 54.06 cents, and July down 0.48 to 55.30 cents a pound.
LOCAL TRADING:
Textile millers' wait brought relief, to some extent if not to their entire satisfaction, as late in the week Rs 25 was slashed from the spot rate to Rs 2450. The ginners, however, felt somewhat hurt, more so due to TCP decision to auction some 50,000 bales of cotton.
Cotton prices ruled in Sindh at Rs 2200 to Rs 2500 and in Pumjab ruled between Rs 2250 and Rs 2550.
The market also suffered from the uncertain signals from New York where both May and July contracts remained slightly up or down of 54 and 56 cents respectively.
Thus the journey started with both spinners and textile millers looking for favourable cotton rates. However, world reports have been telling about both bumper production and higher demand. Only 1000 bales were sold at Rs 2425/2490. The buyers celebrated declining trend though buying remained restricted to 1000 to 2000 bales.
Market sources attributed the insipid trading to optimism on the part of both buyers and sellers who deduced nearby prices on their side. However, the ginners submitted to the dictates of ruling conditions and dropped the spot rate by Rs 25, rather unwillingly. They have been honestly trying to supply contamination-free cotton, as far as possible.
The growers have been asked to continue growing cotton as the country needs it much above demand felt until 2000.They have also been offered Rs 100 premium. Despite intention to show that prices were getting down, buying did not improve. The sales after the price pull-down were between 1000 and 1200 bales.
On Thursday, sale of 50,000 bales, or like quantity, made the ginners cautious. On Friday, they came under additional pressure as spinners showed lack of enthusiasm leading to sale of just around 2000 bales.
Arrivals from fields were on better side. This fact was an added support to buyers. Field reports said that all was well on that front. Prices remained firm but buying quality cotton was no problem.
'BIT' WILL PROVIDE:
Pakistanis won't get rid of daydreaming despite their proven laxity and lag seen in marketing textile products since January 2005. The free trade agreement--abbreviation of FTA--is being equated with 'BIT'--Bilateral Investment Treaty.
When President Bush's visit date was being hotly discussed some cynics rumoured that the US president was postponing his visit. "No", in emphatic tone was conveyed.
The more optimistic pro-US people became additionally optimistic that he would be coming with bagfuls of packages equal to the sacrifices Pakistan had all along been offering through decades, and today for scrupulously making US secure from a big jolt like 2001 World Trade Centre downing.
The date when first the term 'FTA' (free trade agreement) was coined is getting out of memory--say about 4 years or so back. Since then, whenever anybody, from this poor country, lands in the land of plenty is optimistic that he would be back with a load of 'FTA' to match the prices of Indian and Chinese products. But when Bush is already well set back in his 'white house', looking after the problems of the world, Pakistanis here are equating 'BIT' or on certain specifically coined section it is 'BIT' that would provide access to textile products. The primary want should be for linking the provision. But the fact remains that 'Hanoze Dilli Dur ast'.
In the meantime, much water would have flowed down the Indus and the Sutlaj.
The well-wishers of exporters and of the fragile economy are surprised, when they look for money to other countries, as to why they do have not attained the position that Pakistan could offer to other poorer countries. China, South Korea, and Singapore started building themselves, with Pakistan. Where do they stand against Pakistan? At intervals, government changes and accuses others for bringing down Pakistan to such deplorable plight, but Pakistanis remain waiting for a better and more prosperous Pakistan.
SMALL OR BIG CROP:
Punishment in Pakistan against any wrongdoing is written, not in law books but, on the sounds on sea shores. Such writing obviously gets washed out by frequently hitting waves. Probe is spoken of frequently, but in the process fizzles out.
The other day, once again, a harassed voice was heard that the recent cotton crop was small as compared to last year's. However, the following sentence was encouraging that despite small size cotton would cater to the mills' need. The area under cotton crop was 3.3 million acres, a little more than last year. The first target was fixed at 15 million bales.
Authorities are always in a hurry to boost cotton production to 20 million bales by 2010. However, as the first official target reached the market, rain came and outright damaged 300,000 to 500,000 bales. This found mention in the fortnightly statement.
Then the government cotton crop committee proved its existence by holding a meeting to endorse the very first estimate by experts around 15 million bales. That followed reports that rain had damaged good quantity of cotton, but some agri expert came with such hope-infecting words that timely counter-measure would be applied to save from the damage, while production still to remain bumper.
The PCGA fortnightly statements, with probably one exception, have told of continued shortfall compared with last year at this time. It is not known whether crop committee has been incorporated into Textile Ministry to give its own estimate, or the Ministry has been asked to stay subservient to some six sources releasing cotton estimate which at the end proves baffling, The Textile Ministry should not only be given certain charge but should be made responsible for successes or failures. IT may not look so, but is relevant that NAB started probe against the sugar scandal but shelved it after receiving directives from the 'highest' office.
UZBEKISTAN LETTER:
Some months back, Uzbekistan held a grand function, and most of the world cotton grower countries, like China and USA, were invited and participated in it. The occasion was made memorable for the participants to buy cotton from that country from its trading centre. It had also made known to the world that it would be now switching over, in a modest way, to value-addition.
Pakistan did not participate. It was learnt from reports that Uzbek minister had assured of every constraint to be removed, from banking and transfer of money to any other coming in the way. The other day, the KCA attached a letter containing information for those, including Pakistan, who would like to buy cotton. The friendship-seeking Uzbeks also made a trip to Pakistan on more exploratory talks than solid business. However, some agreements were also inked on the occasion. Right up to now, everything happened in utter silence.
Was it Uzbekistan's entering value-addition, beginning from spinning yarn, which deterred Pak yarn exporters from advancing with enthusiasm. The latest Uzbek letter, circulated through KCA office, said that the Uzbek Embassy in Islamabad had informed interested quarters that Urmar Kazimpex, state govt stock foreign trade company, had a possibility for setting up a locally grown cotton fibre.
Further, phone number was also furnished to facilitate contact. The embassy must have been awaiting response and must have indeed received also some deals. Practical actively will prove how much Uzbeks will stand by their promises and assurances to keep deals fair and profitable.
MARCH/APRIL EXHIBITIONS:
A couple of exhibitions on textile and textile machinery were held last year in September.
This year two important exhibition such as 'TEXTILE ASIA' and 'Igatex' are lurking before eyes scheduled for March 18-21 and April 26-29 respectively. Last year, exhibition were held which had satisfied the sponsors but enough material were not supplied regarding the nature and possible business that were assured.
This first 'Textile Asia' will open at the Expo Centre March 18. The sponsors claim the entire spectrum of textile and garment industry is likely to be on display on March 18-21. Those who have previously helped in holding the exhibition have not been given the task, but simply have been told that exhibition will be of textile machinery and leather machinery.
The Igatex, to be held on Aril 26-29 has been projected elaborately. It has been claimed that 500 exhibitors from 30 countries will be visiting. Those who have aided exhibitions are important companies such as Amec Amtex Spanish textile machinery, ICE Italian trade commission, ACIMIT Italian Textile Machinery Association, Singapore Textile Dealers Friendly Association and E Singapore International Enterprise Singapore.
Local contributors to these exhibitions have not been given information how the exhibition will help improve trade and business relation and how much orders for textile item on display and machinery was likely. In September textile and garment products exhibitions at the same location had been estimated accumulative procurement budget of the visiting buyers exceeding $ 5 billion during hectic 4-day gala show. The buyers were from 20 countries including USA, UK, France, India, Philippines, Jordan, Hong Kong, Argentina, UAE, Bahrain, Sweden and Sri Lank.
TAIL PIECE: China and India had been showing interest to work together with Pak textile products. The latest is from BD, which has extended invitation to textile minister to visit that country. Bangladesh has been granted LDC (lowest developed country) status. Any export from this country would be given duty-free entry into major markets like EU and US and earn dollars. BD individuals and in team shape had successfully moved Pak exporters of Hometextil products. Some have already visited and are looking and examining for prospects.
Others are give to understand they would have some sort of arrangements in BD. Bangladesh initially is enchanted with garment making and has already made a good name. BD has been nearly out of home textile business while Pakistan home textile products have also been welcome.
It seems it is time for Textile Minister to pay a visit (as invitation from BD is already on his table) and see for himself what the prospects are worth taking risk. He must also see how feasible it is in BD for the Pak home textile products. He can also help prospective investors to study offers from China and India. The value-added products manufacturers complain about dozens of constraints they are facing today in their own home country.