Cotton buying spree continues pushing prices up, lint at Rs 3350, spot at Rs 3175

The sellers are predicting cotton output at 13 million bales, but consumers are opting for buying irrespective of asking prices which today prevail around Rs 3075 and Rs 3350 owing to record prices of Sindh and Punjab Phutti.
The spot rate within two days was pulled up by Rs 50 to Rs 3175 on Thursday and remained at the same level till the closing of business on Saturday.
WORLD SCENARIO:
The future fluctuated both ways on the NYCE despite bull run predicted in gold at $1000/oz and Chinese increased demand and sowings likely to be sharply down in 2008. The opening day saw December down 0.29 cent to 64.02 cents a pound and March shed 027 cent to 68.67 cents a pound.
The second session however proved booming on background news about gold and grain surge and market players showed optimism the prevailing strong tone could push prices up in days to come. The comment on the situation briefly was that the market was doing what bull markets were supposed to do. Giving detailed account the commentators added that funds are bullish for cotton who hoped cotton prices were likely hop up to 80 cents a pound. And they said they see resistance in open outcry December contract at 65.60 and 66.20 cents and support at 64.85 and 64.05 cents.
On Wednesday trade hedge and option related sales brought down futures owing considerably to strength fizzled out in other commodity. The latest production that USDA was likely to raise estimate from 18.15 million bales to 18.2 million bales. Resistance however, was seen in open outcry December at 65.60 and 60.20 cents with support at 64.85 ti Rs 64.05 cents. Chinese import estimates are still to come as players await.
On Thursday futures showed weakness as expectations were that USDA raising its estimate to 18.2 million to 18.4 (480 Lb) bales from last months 18.15 million bales. The speculative sales are however, also reason for the set back. Market is harassed as players are adjusting position before release of monthly supply/demand report. However market is also keeping keen eye on production set back in China and Pakistan. The open outcry December shed 0.38 to 64.69 cents while March fell 0.36 to 69.20 cents a pound.
On Friday as expected USDA reported larger production for the US and its impact on future prices that marginally dipped. The report projected around 18.2 to Rs 18.4 million bales. The world production was reported to have down to 119.36 million bales from 120.26 million bales. However, December futures shed 0.05 to 64.64 cents while March shed 0.07 to 69.13 cents a pound.
LOCAL TRADING:
Two aspects dominated trading during the week, primarily being PCGA fortnightly arrival at 4.2 million bales and buyers determination to lift at high or reasonably asking prices. The spot rate was idle on opening day but the next session saw rise of Rs 25 to Rs 3125. The PCGA report was stated to have been slowly received by chief players but buttered the hope of buyers saying production would be as high as 13 million bales or over and above the earlier amount.
In other wise volatile political scenario traders and exporters, by and large are hoping government will not let them down. Actually, exporters must see the reasons, as the world preaching democracy would stop cooperation. Meanwhile, spinners and textile millers are determined to stay on the market and lift - without respect for prices.
On Monday 1600 bales had changed while the next day 17000 bales were done. The buying is on ruling prices ranging between Rs 3075 to Rs 3200. Phutti is Sindh had been selling up by Rs 25 to Rs 1575/1675 and Punjab up Rs 50 to Rs 1625/1725 on Monday. The second days trading saw even at higher rate.
On Wednesday spot rate was raised by Rs 25 on foreign news that cotton production cut in this country was likely. Locally buyers said they have to fill their inventory with enough cotton to feet mills. Usually buyers halt buying when prices start surging but currently their requirement is still to match their needs. Over 12000 bales were lifted but buyers' appetite for the stuff was still pressing. The Phutti prices in Sindh were Rs 1550/1650 while in Punjab Phutti was sold at Rs 1625 and Rs 1700. Asking prices in the ready were between Rs 3125/3250.
On Thursday buyers' worry was worth seeing as ginners hinted supply could shrink. Lint price in ready touched the high mark of Rs 3350. The prices though buyers were accepting, but are learnt to have been looking their pace, which they now want to slow. The spot rate was raised by Rs 25 to Rs 3175. Spinners and textile millers stayed until last moment to lift available bales. The rising tempo in prices is bound to discourage them from being so liberally. They had laid hands on more or less 20,000 bales of cotton but will the trend continue, market operators doubted. Phutti prices and asking prices were showing upward trend.
On Friday the cotton market trading report was not made available understandably because of holiday on account of Iqbal Day.
On Saturday there appeared a sort of respite in price hike as most of the deals ere struck at Rs 3325. KCA official spot rate and phutti prices were almost unchanged. Some 18000 bales changed hands.
ACTION ALWAYS PAYS:
Although results have yet to come, more efforts are required to mentally prepare garment trainees to give up stereo types to need no further efforts to induce the importers in EU to nod affirmatively. Suggesting so optimistically should be appreciated to encourage producers whose products are already considered inferior to rival products. The trade Development Authority of Pakistan (TDAP) in short span of its life has initiated productive work.
A report from Lahore gives little idea about the project that should be given wider space and detail as to how the workshop fared. The educative function was indeed good effort in collaboration with CBI centre for promotion of imports and developing countries (Netherlands). The trainers were from CBI (Netherlands) Ms Dayana Vas Pol, Louch, Growen and Henny Tordaan, experts in their respective fields. Did the participants show interest and pick up the art in fashion designing? If they did, it will immensely help the Pak exporters in garments and access in EU member countries.
Report, however briefly, was done, says participants from different segment, manufactures (local trainees) and fashion designers working around the place workshop was held understandably learnt to their hearts content. This workshop was the first of the series to be held in coming months. The trainers highlighted business and fashion trends prevailing in the EU markets. Second day's training report had to tell anything fresh. However, government steps to train manpower will bear fruits.
Meanwhile how the manufacturers managed exports is not surprising, how they are failing to match the products of rivals after the sword of WTO hung over is understandable. On query why government had not achieved fruitful results on tours of Singapore and Brunei, official replied that both governments were not agreed to recruit unskilled manpower on a lucrative packages. Not to play blame game the urgent need is that private sector exporters or government realise the spread of globalisation and its challenges.
WTO, BRAZIL & INDIA:
Those philanthropists and or investors were in rush to establish a global trading body and got nervous on the second thought. They were not earnestly honest is clear from the fact that they already embraced parts of the world could give more then WTO could.
Primarily they cut developed and developing in further segment least developed countries and countries in between developed and developing countries. What caused to start their intelligent selves to create LDC's and countries on way to soon join the rank of developed countries was to buyout countries to bow ultimately and the two finally reap rich harvest.
They have already developed regional trading for obvious reason. Having achieved lot of ground for trade and commerce, on the one hand they are showing up they can't spare more, but asking every thing from the developing countries. Ultimately poor in developing will find no better place than they are today. The windfall of billions of dollars and force full of smiles is being so loudly at intervals being announced will prove nightmare.
India being poorer still is among upcoming countries with domestic growth sustained at 8Pc and above could be lured. Or may be for any reason the es countries see Doha trade talks at last mile." India seems too optimistic of continued growth and for likely better prospect if WTO deal is finalised and globalised. It however perhaps forgets that according to India agency reports that its farmers look optimist while striking a loan deals at the time of upcoming crop harvest but hangs when can't pay back when asked to do so. Against India, Brazil with same rank among 150 WTO members who is also being buttered like India sees trade talks slanted against poor nations.
With the European Union the way the formulas are being calculated we don't know what we will get. I know I won't get I wont get opening because the tariff cuts will still be very limited. The Brazil's foreign minister is hurt and hence he speaks what he feels. He said rich countries say major developing countries like Brazil are resisting cuts in their industrial tariffs some see WTO deal was likely by end 2008. Many top notchers had predicted by end 2007. There are many pessimists who saw this dilly dallying may involve years. The years 2007 is closing is just round the corner. But the ray at the end of the tunnel is too dim.
COTTON WON'T MEET TARGET:
The practice is, and by all account, quite reasonable to fix target keeping in view the raised acreage and climate. But the condition is that previous season's production should not be fictitious. In America and elsewhere business ethics is observed and with a view that any wrong-doing will cause harm to the growers themselves and the nation as a whole. Even the USDA release different production figures at intervals but based surely on certain factors causing setback or airing good yield.
In Pakistan, according to the circles with local knowledge, slight rain is assumed to have caused too much damage has been seen viral attacks and this or that pest attacks. The independent agencies and government crop committee issues day today changing conditions on hear say basis so as to drop on the spot study is to save money and labour. Even interests are allowed to vaunt rubbish , knowingly for sure they cannot be honest. The truth is not accepted by one or the other interest and they stick to their pronounced data.
Besides the sellers are bound to see production to be low whole the cotton consumers put all figures exaggerated. When sellers according to circles, pull spot prices up, the buyers don't always take for granted that short fall in cotton crop is expected. That is why buyers sideline and sellers correct their action by setting prices in line with the size assessed by themselves or taking for granted their fellow travellers up country.
The so-called government agency, if that is also proactive and honest in surveying the prevailing condition on the spot can be made to act as an honest umpire. But, either they don't have enough provision or are too lazy to visit and interview relevant growers and quote their spot assessment to nullify the estimates by interested quarters. Last season 13 million bales were produced how one could be sure if not to buy satisfaction for themselves. Current out put is being quoted at 12.8 million bales short by 2 million bales.
REASON: Rains, CLCV and mealy buy all combined must have caused that much loss. The earlier target or production estimate was placed at 14.14 million bales.
But then interested quarters started playing with figures accusing Aug/Sep rains CLCV attack was stated to be modest, mealy bug caused real harassment among growers and agriculture department employees. But dissemination of information was un attended. The field workers must have been taken to task. No one however knows about the same.
SUBSIDY FACILITIES QUESTION MARK:
Happy sounding report was that textile registered market growth of 0.53 percent in first quarter of July/September 2007. But the report compiler has slight block in approving whether that growth contained element of rejoice. As be noted that subsidies worth billion of rupees to the textile sector have not been able to enhance the pace of growth. What is consoling yet the exporters have not ever expressed optimism to the effect.
About threat that textile millers are leaning on other crops, for better return the manufacturers of value -added goods should set up modest spinning mills or should look around one on sale at acceptable price.
The knowledgeable sources expressed concern that under the global system huge subsidies is a violate cumulative amount being Rs one trillion including research and development money. Sources wondered if switch over to other crops will give government insight to check whether the decade old practice is maintained. The result will caution government besides WTO rules won't poor tax payers money to go in efforts to beat rival textile products.
After years of expectations SBP was made an autonomous body but it seems influential people are being exploited to collapse a tried system and applied principle. The textile sector has not a single manufacturing plant, chemicals and dyes units which save tons of dollars annually spent on imports instead of independent and autonomous bodies are tried to made subservient by force should be questioned only if their policies and practice prove negative.
The SBP governor has been approaching the problems have played havoc with economy and country within her command and had taken up make currency vulnerable, unnecessary facilities enabling imports of machinery etc despite pressure. And, no doubt she has been strengthening exporters to compete with their rivals.
The Doha round has exposed the weaknesses in practices in certain countries, and it has not been going strong. If at all it will see the Dawn it will take another around decade. But textile exports won't see the return of good old times!
TAIL PIECE:
So, what had quipped a DIG peon 40 years back and that stands unchanged till date. Those days some improved version was being planned to if not eliminate, minimise corruption among law enforcement agencies some rules were to supersede the existing once, salary had to be increased, uniforms smart looking and dignified, were to be supplied. This was a young reporter then had told the DIG peon sitting on a wooden stool which surprised the reporters. He was not able to think and answer when the uniformed wearing peon said, "the measures will balloon the under hand "facility".
The container transshipment through one custom system: importers NYN's to be verified with master index. The peon of any office even today jump to quip, so what. No, a report few days back spoke of great vigil, criminal proceeding against 14 industrial units under the ST act of 1990.
Where the person suspected of tax fraud or any offence warranting prosecution if a company whom the authorised officer has reason to believe is personally responsible for the action of the company contributing to the tax fraud shall be liable to arrest. Provided that any arrest shall not absolve the company of the liabilities of tax payment, default surcharge and the penalty imposed. And why one will be struck with deep silence is that the fraud is detected after two years.