A firm outlook in cotton trading was developing with the news coming about water shortage. The shortage will delay sowing. The ginners were stiffening their necks and hence spot dropped to test market strength was soon reversed the other day. The TCP floated news was adequately heeded as cotton consumers re-planned their future buying activity.
WORLD TRADING: The New York cotton futures were staying modestly higher for third consecutive session on selling/buying by speculators besides offer was lacking as players waited for the week end supply/demand figure and weekly export sales report. However, the opening in July was at 50.94 and in December 53.50 cents a pound.
The opening session closed higher bolstered by speculators buying back short position together with limited trade selling. Traders said they had a little-short covering early, and they were able to hold the trend. They observed that if they could close above 52 cents (in July) then they could have in fact bottomed.
The moot session ended higher for third consecutive session as a result of speculators buying back their short covering amid thin trading. The major players observed the day was quiet, they noted that market participants appeared to be holding back before the USDA supply/demand release on the weekend. They thought that price over the couple of days hinted that they made the low in. There they hoped had nothing to go down.
On Wednesday the winning streak ended as futures went down. The market awaited USDA release for change in trend besides some clear indication it had from China. The USDA estimate on China's production and imports will draw close attention, especially after the USDA attaché pegged Chinese cotton imports at a record 1.88 million bales (480-lbs).
On Thursday the futures ended with all round buying by players covering position just in case govt supply demand report springs a surprise on the market, The USDA report was expected on Friday would also be replete with substance that could change the trading pattern.
The market operators also spoke about attention likely to remain focussed on China's production and cotton imports. The USDA report said sales amounted to 191,800 RBs and shipments amounted to 950, 800 RBs. The figures supported belief that cotton will have robust demand.
On Friday futures ended up supply/demand forecast 2006-07 showed robust cotton consumption of 122 million (480-lbs) bales. While production was estimated at 115 million bales. This is bound to affect trading and price in coming week, though dry condition in Texas and South remains grave.
LOCAL TRADING: The local cotton trading moved round a couple of factors, such as ginners perception that situation due to water shortage was grim and a rise in prices was certain, but the thinking was off set by presence of the TCP which released 30,000 bales in the week that had positive effect on the prices. Trading was comparatively slow some 15000 bales were on sales. The spot rate began with Rs 2400 (without upcountry expenses).
With a loss of Rs 25. On the opening day cut in spot rate softened the trend. The ginners and textile millers both were in relaxed position - ginners lowered the price, put cotton on offers and spinners and textile millers took advantage of somewhat changed position.
Around 5000 bales were sold some in big lots. On Tuesday situation changed to negative as far as trading was concerned. The boost to buying due cotton prices coming down reasonably, encouraged ginners to raise spot rate by Rs 25, which was cut a day before. The idea backed by the fact that sowing of cotton crop was creating anxiety among growers and those who had still left with some stocks boosted prices and held back stocks. A solo deal was registered sold about 2243 bales of cotton at Rs 2475.
The next day's session was cautious as both aimed at taking full advantage of situation from water shortage report plus the entry of the TCP with 30,000 offer to consumers. The textile millers had earlier pleaded not to sell advice be given by the authorities to the TCP to the exporters. However, authorities attitude was that of silence on the issue.
On Thursday ginners showed firm grip over situation which they wanted to take advantage of. Spot rate was unchanged and spinners and millers roamed in the market showing their attitude to buy quality cotton and at reasonably acceptable price. Nearly 4000 bales of cotton changed hands which in view of the TCP sales is quite noticeable and encouraging. The strike call for Friday is likely to have some effect on the trading and ginners may offer cotton as well as on reasonable acceptable price.
On Friday buying support was visible. The ginners looking for this day to come raised the prices higher. The water problem is being confused by statements by relevant people. The sowing is certain to be delayed. The TCP still has more or less 200,000 bales, which may come to rescue the cotton consumers. The spot rate was raised by Rs 25 to Rs 2450 and similar amount raise was in asking prices in ready. On Saturday ginners were not in hurry to dispose of the unsold cotton stock following the world bullish reports. The official spot rate was unchanged at Rs 2450, without upcountry expenses.
The prices may show firmness in the coming days following the USDA report. The mills are likely to increase cotton buying on anticipation of rise in the prices
EU COMES TO RESCUE: The 25 members of EU have obliged some half a dozen exporters of bedlinen considered to be reduced burden of anti-dumping duty of 5.8 percent from 13.1 percent with effect from May 7, 2006. Thank you, EU. But slight shock they left on the victims, if they were so, as most of them were made to suffer more on assumption than the charge stood against. Most of the bedlinen exporters should have been given fair chance to explain.
But on the pretext of law and order situation conducive investigators left and outright 13.1 per dumping duty was imposed. Such a reprimand came when WTO rules were about to be set in. Besides, the Pakistan goods were of ever-approved quality and this country stood by EU and the US against terrorism, which involved a lot of additional money for recurring expenses.
The two countries were expected to have soft corner, particularly when the EU was not sure of the wrong committed or not. However, leading exporters of bedlinen have expressed gratefulness at time Pakistan textile was faced with internal and external road blocks.
The EU probably knows that this sector has been overcome and fought all odds and has been contributing significance forex earned by this sector, very recently the bedlinen exporters were so upset that they not only considered the invitation of one time partners from Bangladesh to cover up some of the losses. Bangladesh enjoys being the Lowest Development Country (LDC) and have free access to markets of EU and the USA. Besides, other facilities derived from the BD govt is much more than home textile manufacturers and exporters get here in their own country. Some month back hectic activity was being marked and their activity and movement was known.
Now they are not available on phones. However, this sector particularly along with apparel and garment manufacturers and exporters need to receive proper attention from authorities for these contribute good quantity of forex compared with cotton and cotton yarn exports. What along with appreciation of what EU members have done by reducing the margin of duty from 13.1 to 5.8 percent the bedlinen exporters chairman Shabir Ahmad's appeal to do away with entire 13.1 pc appear qualified. It is hoped next step and soon will be to free bedlinen exporters from punitive duty on compassionate ground and keeping with the long lasting ties.
TIME FRAME IS DOABLE: It must be a matter of pride for Pascal Lamy head WTO, particularly at a time when a long distance was covered from Multi Fibre Agreement 9MFA) to the World Trade Organisation (WTO). Lamy must have also been feeling to accept on offer of the tricky job to give it a successful finishing touch.
The WTO has absorbed entire aspect related to global trading unlike MFA which had been regulating only textile basically. But as he took over he not only came face to face the world super power which side tracked the meaning and principle of WTO to signal that might will still be the right.
Poor Lamy had also come under attack from its own EU members who particularly France who warned to stay within the mandate, which had gone already unbearable limit. This Lamy who wants to end with success of the WTO have stooped to invite powers putting road blocks particularly America to come to term by April 30, but it was super power and extracting all in this case lifting subsidies to its farmers was hard not to break. In private it had been taking conciliatory attitude.
Now he naturally came with an appeal in a German daily that he was still confidence that Doha Round of negotiation could be concluded successfully but he could hardly check himself to warn of risks of failure.
He further added that if we do not conclude the negotiations this year then the TWO is threatened with a period of deadlock. "The collapse of the Doha Round would be a huge strategic failure." Despite talking of WTO talks being threatened he in a tone down said he was hopeful that a conclusion in 2006 within the time frame we are aiming for - is doable.
The attitude of powers who would be able to make the WTO talks move is certainly that of you first - America, European Union and the so-called Third World. Last couple of years when the chiefs tried to bring life and meaning into the organisation a sort of feeling of wrong dominated particularly those who are the sponsors or who can or undo the entire efforts made so far. The super power has been rushing with speed to enter into regional agreements nomenclatured as BIT and FTA etc, and has not come, disappointment surround it.
BIT: BALL STILL IN PAKISTAN COURT: When the Free Trade Agreement (FTA) was thrown in the background bringing the praise for the Pak efforts to fight terrorism (so called) to the fore. Several trips have been made to the US in some months with hope US will provide this country with proportional advantage of some kind - BIT, FTA and TIFA. But that proved hoping against hope.
When FTA considered not only perhaps better in the face of Pak sacrifices in different ways, BIT was the toy offered to console. That was hoped to be inked when Bush will be here for few hours to express feelings or good feelings for security of long time friend, it was quietly bundled out.
Since then BIT has been twice in news with reference to American security of assumed huge investment in Pak.
The same is once again in news as Pak Commerce Minister has pleaded that some flexibility is shown to overcome the problems and be inked so that Pak gains from that sole super power earth. However, the two disputes holding back the accord have not been clear whenever reports appear. The reference is made in such camouflaged words and sentences followed by paras that exact meaning cannot be made out.
But whole thing is in such hotchpotch way which only leaves BIT has yet to have some solution. Pakistani authorities are embarrassed as to how long words of praise will keep the strings of friendship in tact. The passage of time is fast and fear is that all favours ultimately turn out to be one sided. The PM has as on Saturday (May 6 2006) appealed to the US that such accord that make investment and trade to desired limit should take shape to boost two way trade and strengthen Pak economy.
If BIT, FTA or TIFA are given effect through inking of accord they will automatically send messages to not only USA but to whole world about to come forward and help Pakistan which is already on road to progress. Its growth rate, forex reserves and bulging stock markets are apparently calling the resourceful to try this investment friendly country with prospect of ensuring good ruling.
WTO: ANTI-DUMPING DUTY: So called protection, surveillance and anti-dumping duty etc all are closely knit means to give sort of legal effect to discourage the most competitive nations to indulge in bulk exports. To favour some favourites for whatever reason, to give preference over the others on flimsy grounds of dumping excessively to hit local manufacturers.
If for whatever reason manufacture of say garment and other made ups cannot make for whatever reason their products cost effect and competitive, those who for whatever reason can produce and supply textile or any other materials at lower cost will be dubbed to have dumped at lower prices them local producers could sell to its consumers.
And the watch-dog in this WTO could simply say imports were hurting the local millers and hence should be given penal action or anti-dumping etc without going into the experience why one cannot produce cost effective products and others can. Under the confusing situation question arises why WTO or such MFA are offered coated with sugar to make not as advanced nation as the sponsors if such organisations attractive.
But if these jobless and hungry people take challenges and prove worthier than others immediately protection and anti-dumping duty swings into action to show up that weaker, no, in fact uncompetitive people are offered protection. China has been accusing America for violating WTO rules for long time past, at least since January 1, 2005.
Actually China has thrown veiled challenge that if WTO has to be respected restrain on supplies will have to be removed. China has again accused major powers like US and EU of launching unjustified investigations as a tactic to scare off domestic firms wanting to import competitive foreign products.
How much justice you can get is evident from the fact that if you want to seek justice if judges rule in your favour, the process is long tiring say two years during which allegedly dumped goods suffer from extra tariffs. So far the US has lost cases in WTO but it has taken recourse to refilling and another bid - China is reported to be the top target for anti-dumping action. God help Pakistan as it has fairly good number of cases.
TAIL PIECE: fortunately Pakistan has enjoyed sustained warm ties. It has been continually trying for long to make Pakistan partner in tremendous growth. But apparently the warm stretched hand was received not as warmly because investment had to be made and hard labour required.
The wide varieties of offers included a textile city to be built by Pakistan in a Chinese province. Many have set up so-called Textile City including India. Lieutenant General Munawar Bokhari (Retd) writes from China and is quoted sometimes: I am somewhat concerned about our general apathy towards China and undue preference for Europe and the USA. Pakistan presence is not commensurate with the 'taller than Himalaya' relation that we take about. Pakistan is not visible in China. On the other had India visible in a long way:"
There was more sermons but what ever has been quoted above could make change in outlook. God help Pakistan and those who want their names to be written in bold letters. But.......!
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