The world cotton supplies and rates impacted trading in local market where they rose cautiously and finally on the reports that cotton arrival was seen prices took to favourable turn for the buyers. The spot rate held at Rs 3200 while rates in ready were seen between Rs 3200 and Rs 3350.
WORLD SCENARIO:
The futures fluctuated both ways on the NYCE cotton trading impacted by small speculators sales or buying, as major players were not one in speculating rates in coming days.
On Monday March showed gain of 0.41 cent to 68.30 and May up 0.46 to 70.16 cents a pound. In the absence of strong fundamentals, players saw market range bound as they depended on gyration on the grains market. Analysts were of the opinion that lint prices would need to rise further in order for American farmers to stick with cotton instead of switching this season to plant grains like soyabeans, wheat or even corn.
On Tuesday slight down drift was marked as most of the trade believed that China should pick up the pace of its purchases ahead of Lunar New year in the coming week, before mills close down for 10 to 20 days. Besides, players look on to Fed rate cut or the NC countries annual planting survey for sowing in 2008.
On Wednesday futures gained as USDA was expecting phenomenal surge in weekly export sales. However, most players are worrying and praying for returned good days for cotton.
On Thursday, ICE Futures' open-outcry March cotton contract fell 0.77 cent to end at 67.79 cents per lb, moving from 67.25 to 68.10 cents. May cotton droped 0.73 to 69.70 cents and the new-crop December cotton contract shed 0.63 cent to 76.40 cents.
ICE March electronic cotton futures slid 0.54 cent to 68.02 cents at 3:14 pm EST (2014 GMT), moving from 67.23 to 68.70 cents. On Friday ICE Futures' open-outcry March cotton contract rose 0.37 cent to end at 68.16 cents per lb, moving from 67.90 to 68.35 cents.
May cotton added 0.38 to 70.08 cents and the new-crop December cotton contract gained 0.29 cent to 76.69 cents.
ICE March electronic cotton futures increased 0.44 cent to 68.23 cents at 3:17 pm EST (2017 GMT), moving from 67.85 to 68.40 cents.
LOCAL TRADING:
The cotton market is passing through a couple of patterns leading to occasional surge in lifting by consumers and soaring prices. However, the change in world rate - scaling down and Indian exporters turn in to deliver Pak importers has hit local cotton. The spot rate was lowered to Rs 3150 while asking prices ranged between Rs 3150 and Rs 3350 per maund.
On Monday, firm prices had sidelined the hungry consumers but cheered by permission to import low mix cotton from India and in fact news that the delivery was to start soon brought them back to cotton market. Phutti had on the opening day a sale value at Rs 1400 to Rs 1500 in Sindh and Punjab.
But the following day it was raised by Rs 100 to Rs 1500, of course low type but better one was up Rs 50 to Rs 1550. In Punjab inferior rose by Rs 50 to Rs 1550 while better one rose by Rs 75 to Rs 1625. Nearly 4000 bales deals were finalised.
On Tuesday, phutti prices were sharply higher as low type in Sindh was up by Rs 100 at Rs 1500 and better type was higher by Rs 50 to Rs 1550. In Punjab it followed suit and gained Rs 50 for low quality at Rs 1500 and good type picked up Rs 75 to Rs 1625.
The deals were reported :2400 bales from Rahim Yar Khan at Rs 3350, 600 bales from Sadiqabad, 600 from Khanpur at the same rate and 1400 bales from Dadu at Rs 320
On Wednesday spot rate was put at Rs 3200 while deals in ready was marked around eight to ten thousand bales. Market sources hoped trading will pick up with every passing day. On Thursday, no business was seen as both ginners and spinners kept on the sidelines.
On Friday, official spot rate was down by Rs 50 to Rs 3150 amid rising expectations by the spinners to import better quality of cotton at cheaper rates, experts said. The following deals were reported as some 1600 from Dadu sold at Rs 3150 and 1000 bales from Chistian at Rs 3175-3200.
On Saturday, mills were not much active as most of them were hoping that prices will come down more in expectations of import of good quality of cotton at the lower rates, in Sind phutti prices were at Rs 1500-1550. A solo deal was finalised at Rs 200 bales from Mirpur Khas at Rs 3215.
TEX EXPORTERS ASKED TO BE CAREFUL:
Textile and clothing are a must need, after food needs, to survive, which no country or population can ignore. Therefore concentrating on these needs is absolute necessity for countries that manufacture them and more so is the need of population in any country they live in. So living in constant requires watch how the products are made desirable cost and quality wise.
These days daring lots producing textile and apparel should also diversify the exportable products they make. Pakistani exporters have perhaps not learnt how to diversify and spread products in every nook and corner of the world. China could be very amicable and friendly as she is to us. China concentrates, undoubtedly, on Europe and America which is not questionable.
But Chinese traders, if you go close to them you will find, don't depend on bigger markets alone but hardly ignore Africa, India, Pakistan and rest of Americas. Where, however, they differentiate is the cost, and liking and interest of those who will buy and adorn their bodies. Quite naturally, Americans and Europeans who have excellent life styles should be considered as they are. They are crazy to live nicely and eager to be better than majority population of African countries.
Chinese make apparel and hosiery products which are liked by higher cadre in African countries, and whose cost should also be suited to their pockets. There is little to inquire why Chinese have grabbed the market and people wait for their products.
In Pakistan, as is the trend, perhaps, the producers cannot imagine there are countries where people live and long for products within reach to cover their bodies and protect them from chill and burning sun. Some exporters of poor Pakistan had, as a matter of habit, exported textile and clothing on good faith of payments without delay.
But some textile bodies, already in trouble, have constrained to advise exporters to deal cautiously, owing to a general belief that certain countries are facing recession risk. The exporters have been mainly asked to abstain from exports on (document against payment (D/A) or through D/P (Document against Acceptance).
WORLD COTTON RATES DOWN:
What in business world is called 'correction' has hit local cotton market following signals of downward drift in NYCE, around three to four cents. About 10/15 days back cotton prices were rising, not on any, fundamentals support, but how grains rates behaved in Chicago. This linkage with grain markets has dropped down from the blues as developing third world have not been allowing - more access to their market in the wake of WTO and majority members demanded more cuts in subsidies to agriculture, more prominently to cotton. This tug-of-war has been persisting since 2001 and expressly after 2006.
This year China planned more production to keep itself away from imports from India or elsewhere. But they still need lakhs of bales for which they will seek sooner or later. Speaking about Pakistan, with only slightly over 10 million bales yield, needs nearly 400 to 600 bales import including low mic. America has shown willingness to honour approach.
Meanwhile, Pakistan had been impressed by record cotton production in India with brilliant support of B2 cotton. The importers from Pakistan approached Indian exporters for bulk of their needs. The prices were favourable. Then, due to overnight turn in prices upwards, the exporters recoiled and held back exports to Pakistan. However, the world cotton has lost around three to four cents and Indian exporters have indicated exports of (recently allowed by authorities) around half a million bales of low mic. The consumers in Pakistan, who were resisting purchases until a slash in cotton rates are, likely to find Rs 100 drop.
However, on Monday buying was restricted to just 4000 bales in price range of Rs 3200 to Rs 3300. The spot rate was however stuck up at Rs 3200 and phutti in Sindh and Punjab was being sold around Rs 1400 and Rs 1550. According to spinners and textile exporters setback of various types were showing teeth and discouraging further manufacturing. Mostly reports are related to closures, non-payment against already exported and products received by the importers. Whether imports of around half a million bales of low mic starts reaching Wagah any time soon will be awaited for likely drop in cotton prices.
EXPORTS, UTILITY BILLS:
All concerned with the exports of any product play their role, whether it be government or the exporters. As far as the government is concerned, constant efforts to get access to the European and other big markets were met with failure. The protectionist instrument has been employed to minimise the exports from Pakistan on one count or the other. The EU that has been very considerate and friendly has done nothing to lift anti-dumping duty, which continuos still. American assurance too, for various kinds of help in the shape of BIT, FTA and ROZs also seems to have been in lurch, pending a green signal from Congress or other bodies.
At home the exporters, particularly textile exporters are making noise about their products losing competitive edge to its arch rivals. The exporters are prone to repeat time and again their problem causing their products to be a hit by high cost of doing business. The fact is that authorities, manufacturers and exporters, have been naïve. They should have been mindful of basic needs the very day they started the journey 60 years back. Even today they continue to be as naïve.
They have turned deaf ears to the basic need of textile manufacturing units and factories to produce dyes and chemicals to replace imports from world over. Exporters are making noise about partial or total absence of gas, power and water while they have simply ignored questions whether gas and electricity cause high cost of doing business or textile machinery, dyes and chemical imported from world over add to high cost of doing business.
Today authorities are talking about knowledgeable export sector. Well and good, but what about the streaming demand of gas, power and water, and that too since 1948 onwards. As the above was being written, newspapers carried "Mercy Appeal", against big discrimination. However, one thing experts have been saying, and they are on record too, that petro chemical units are the mother of all industries. Today as tax evasion is debated and talks about water resources are at the peak, if questions put above are given serious thought, textile exports will beat all rivals.
WTO MEMBERS KEEP HOPE ALIVE:
The WTO members - 151 so far - have lived with hope, and they wish to live with it until the departure of Bush in January 2009. A meeting recently has invoked a lot of fresh energy and oxygen. Lamy stressed that a final deal was possible in 2008. Those members were more optimistic who saw this big bang happening in April, around three months hence.
The economy minister, who had invited negotiators from 20 countries for talks on the sidelines of World Economic forum in Davos, said invitees were working on a ministerial meeting in April to agree on trade in farm and industrial products. -But the minister hurried to caution the mediamen that ministers will only meet if papers and technical work can lead to solutions.
Brazil's FM was a step forward in offering admixture of hope and otherwise as he put in words, the next two or three months are crucial to see if we close the round this year or not. The minister did not pause here but he actually rained out the truth holding the WTO as hostage. His words "I am hopeful we are able to do it, of course it will cost some efforts on the port of every one - "Lately India is making its existence felt by saying such things may not be good for the 3rd World in days to come.
Brazil, also acting on behalf of developing countries, uses words that are guarded and avoiding comments that will even distantly hit developing countries below the belt. The round, as is well-known, has been bogged down for the past six years, mainly due to a rich countries grabbing more access to poor countries scarce resources. This is in the background of the votes the leaders in developed countries are conscious, of and fear making subsidies on agri products, more particularly cotton.
All WTO members and top leaders knew a deal was must by 2006, but elections intervened. The goal of an agreement to sign WTO deal is unlikely to work till the election results and change of government in US. The democrats too have same apprehension, which Republicans had harboured during past six years. Once again President Bush is being liked as people think momentum could come from him, it being his final year, Bush is thought to wish a deal before leaving in January 2009.
With the in house majority of the Democrats and declared opposition of deals, regional or international, paying premiums are not (in their several pronouncements) acceptable. And if Democrats digest all these deals without making amendments, is unbelievable, so, why not experience another six years hoping for better.
TAIL PIECE: Should it happen particularly when there is all round hue and cry about shortage and outage of electricity by the exporters. Sindh government sees conspiracy at federal levelstrange. The provinces are part and parcel of the federal set-up and furnish strength and unity. Sindh being the gateway to exports and imports and provider of bulk of finances to the centre, needs reciprocal sympathy.
Had the report not used the word 'conspiracy', perhaps it would not have attracted attention. Besides, it is the feeling of caretaker chief minister contained in his a letter saying regulatory agencies at the federal level have not been supportive". The chief minister had tried to convince the importance of coal based power plants. Similar dilly-dallying had been caused when it was found imperative that oil field exploration was necessary to save money (foreign exchange) on purchase of gradually rising oil prices. But the authorities had a bundle of reservations more prominent that exploration was costlier.
Today what TV debates have been revealing, is shocking. The Chinese company was and is prepared to contribute coal-based power plants which will save tons of foreign exchange which is depleting due to high cost of business. The words of Halepota are worth giving a positive response. His words "we firmly believe that such action negates the political will of the government and also discourages development in the coal power sector," need backing as desired by him. According to a report caretaker PM has formed a committee.
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