Cotton sellers and buyers seemed to gain from their own perception leading to slow trading despite cut in spot rate. Their perception was based on fact that buyers will have to return while sellers thought they have manageable stock. Spot rate was down by Rs 50 to Rs 3100 on Thursday.
WORLD SCENARIO:
Grains values were witnessing setback prompting cotton traders to indulge in speculative liquidation leading to substantial losses in futures on NYCE trading. March sank 1.93 cents on Monday to 66.40 cents a pound, while May shed 1.81 cents to 69.01 cents a pound. The major players however expected correction in a couple of days.
On Tuesday had to hear another lows on sustained speculative trading and on expectation surge was around. Meanwhile, market quietly digested news that US farmers were planning to sow 9.5 million acres during 2008. However, analysts believed the sowing figure was still high.
On Wednesday speculative sales kept softening trend alive as players waited for some potential sales report of the govt. grain markets, however, playing lately important role in influencing the rise and fall in cotton futures.
Traders said they were afloat and near by held hostage by the vitality of grain markets. In the meantime players were looking weekly export sales any moment. The March shed 0.11 cent to 33.91 cents while May lost 0.16 cent to 68.64 cents a pound.
The futures attained phenomenal rise in Thursday session following investment fund buying and rally in grain values encouraging players to hope the trend to continue. The USDA weekly export sales also provided boost. Sales report amounted to 277,900 RBs (500Lbs) while cotton shipments of previously booked order hit 234,200 RBs against previous week's 200,000 RBs.
However, the week end session did not maintain the previous surge and subjected to be lower due to switch liquidation and speculative fund profit talking as other grains too had depressed day.
LOCAL TRADING:
KARACHI: The cotton consumers took a lenient view of lifting cotton without pressing ginners to lower price because of the expected recession worldwide ahead. The result was spot rate was dragged down modestly by Rs 50 to Rs 3100. The spot rate is symbolic giving wisdom to the sellers and buyers that in ready asking prices may be generally higher also but on occasions. Initially buyers observed restrain and lift depicted stability both in prices and sales deals. As a matter of fact sellers were not showing interest in deals for sending a message to buyers they were not apprehensive as world prices were not necessarily coming down drastically.
On Monday not a single deal was witnessed changing hands. On the second session also buying was small, just two deals totalling 4000 bales in prices range of Rs 2950 and Rs 3300. The spot rate was slashed by Rs 25 to Rs 3150. On Wednesday second fall in spot rate was marked further Rs 25 down to Rs 3100.
But consumers appeared to be not impressed as they lifted only around 1400 bales at prices ranging between Rs 3100 and Rs 3200. Phutti prices, however, stayed put both in Sindh and Punjab at Rs 1350 and Rs 1450. The buyers, the market sources said, are making mistake by staying on sidelines while they observe ginners were certainly not in sage arena. Cutting spot rate downwards was only a signal they were making up mind but pragmatic action can enliven local cotton market.
On Thursday no fluctuation was reported while spot rate was put at Rs 3100. Phutti prices both in Punjab and Sindh were noted at Rs 1350 and Rs 1450. The brokers saw the low activity mainly to two reasons; millers need to see prices fell further and transportation problem owing to tempo in electioneering. The Friday had similar trading pattern with no fluctuations reported. The spot rate was put while phutti prices too stayed put at previous levels.
Saturday was another day of inactivity, Spot rate remained unchanged. No transaction was seen in ready business.
ON TOP OF ALL WTO SEES PORT CONGESTION:
How many perceive vulnerability has curt tongue. Smiles spring up despite grim ridden surrounding which have knocked Pakistanis doors after few years of gap in the shape of elections since the martyrdom of the first prime minister of this God gifted homeland for Muslim.
He breathed his last with last words on his lips "Allah Pakistan Ki Hafazat Kare: And indeed God is keeping this country's existence but despite lapse of six decades the uprooted and comfort missing people have still familiar prayers on their lips, knowledgeable circles said.
The so much trumpeted WTO which was supposed to bring to all doors smiles, by ensuring fair global trading had not fixed any wrong doers. It has however, cautioned engaged in two-way trading with Pakistanis that ports here are congested. However, rejecting this groundless port congestion repot by the WTO, Shipping Minister Dr Fahim-ud-Din Ansari called the report absolutely wrong. Explaining he said at the moment we have zero congestion at our ports.
He said in few words "this is the story of 1980's not now. The exporters of all kinds, particularly textile products, who felt depressed on issuance of advises to importers to refrain from going to this country and for obvious reasons.
Do any government advises hunters of man eaters animals to refrain from entering thick jungle of Africa or Amazon valley? Today Pakistan with all its vulnerability election in few days time, finding loopholes at this junction is any thing but an amiable act. Pakistan has for long 60 years in search of a country to enter into two-way trade, but formidable ones on one or the other grounds prefer to oblige with AID. The sources touched upon varieties of issues that have made this full of talent and potential country probably the most vulnerable.
A VERY RECENT WORLD BANK REPORT, SOURCES POINTED OUT WHICH REFLECTED THE SAME IN THE FOLLOWING WORDS: the very sustainability of Pakistan as an independent nation may be at stake as shortage could lead to increased social discontent.
Sources said the WTO and for that matter friends and partners should be rather more pragmatic instead.
SUBSIDY ON R&D:
The probably most valuable contributors to exchequer Pak garments manufacturers considering more deserving for government subsidy on research and development (R&D) has through their association chairman desired to benefit.
What, however, sources were surprised about was how this formidable sector was missed by the authorities. The surprise the statement express in the following worlds: Ironically the government was subsidising R&D on exports of sub-sectors like home textile and fabrics to 74 countries while the same was in effect on the value-added garment export to only 34 states.
The old sorts of complaints that the subsidy was taking away edge by the garment manufacturers. The garment exporters took exception of the fact their garments exported to central Asia, Malaysia, Ukraine, Russia, Turkey, Norway, NZ and other countries of central Asia, South America, Africa, EU were kept deprived of the R&D subsidy. Such an attitude, Bilal Mulla questioned will hardly encourage more value addition as the authorities seek them. He suggested measure such as amalgamation of three lists of countries into one for all the three sub-sectors including garment products.
The value added sectors particularly bedwear, hosiery towels and readymade garments were always hard up. These ware the days loudest voice was heard in Islamabad.
This is, however, welcome that all the above named products, except garments, according to the prgmea chairman have been if allowed to say have been awarded or facilitated. Why the most welcome garments products in bigger market have yet been left out is not good for the manufactures or the economy either.
Bilal Mulla says garment exporters were already facing several challenges. Including abolition of Chinese exports safeguards increase in cotton prices, labour cost energy etc accession of other developing countries in WTO fold an uncertain trade environment and tuff competition among suppliers of east. Hence government should extend the R&D facility until 2010.
WILL SOLUTION EVER BE FOUND?
The exporters are unlikely to match even last season's amount is crystal clear from unprecedented hue and cry about high cost of doing business besides latest uproar about the shortage of gas and oil, telling on exports edge. But government is incessantly under pressure to pour more, while government helplessness is in the words of a recent World Bank report, corruption in hindering developing projects.
The SBP has said before a couple of pressing problem and their solution have not been keeping people in dark about internal debts that is attuning giant proportion. This is the time when exporters should be serious about setting up textile machinery manufacturing units and of course billions of dollars draining out chemical and dyes units, if possible cities on lines of textile units either in the process or should be out soon.
If one reads critically even the headlines of any newspaper a lot of background reasons come to mind, sources said. Another recent report quote the FBR holding up Rs 39.73 billions sales tax refund. Under this head, sources said around 10,000 tax paying units are in wait for disbursement. Surge could be in a position to keep exchequer strong enough but decline in ST collection was marked. The mills have on their part assured full access to their records.
Desperate attempt had been taken by authorities in the past also, but the same stress finds headline again that customs has been directed to curb under invoicing.
Such is condition and textile machinery, dyes and chemicals and even cotton are mercilessly draining out tons of dollar on their imports. Last mentioned items are must for textile products exporters, but setting up of units to manufacture locally has never considered as important saver. The show piece under which they are coming up have not been able to help textile millers or traders to help cease voyage to India, China or Eastern Europe. It is high time that a pragmatic thinking and of course action for solution is found instead of finding fault with the textile ministry.
COTTON FRONT GENERALLY QUIET:
The recession that at the moment is only being talked and awaited has held business and exports to a halt to a great extent. The cotton and textile millers are watchful, which way the winds would finally blow. The lint in NYCE trading has lost its identity and its value today is kept linked with other grains like. corn, soyabeans and wheat etc.
In Pakistan since market reported improved supplies, buying has been restrained, though spinners and millers need cotton. Locally, millers have been banking on Indian cotton that lands at Wahgah then in mills inventory without much ado. The ginners have not been showing their fear in cotton piled up at ginnreries they will be in trouble.
The ruling prices or rates in ready are favourable to them a bit above the spot rate at Rs 3150 or below it. The last PCGA fortnightly statement on arrival break the perception that prices may range at Rs 3300 and Rs 3400 or even better. The spinners and textile manufacturers had have a sigh of relief. Even today they are buying at ease and hoping lint prices will dip under pressure of higher production report and expectation that India will meet commitment it had made to Pak importers.
What, however, seems strange why the buying has been slowed as the ruling prices are favourable to cotton consumer also. The factor according to knowledgeable circles maybe that help from the ministry had dried up mostly.
It has shown its helplessness to do about gas and power crisis. The exporters could also think that they restrain buying to force sellers to bring down cotton prices and the reports are also telling that recession may pull demand world wide down.
Any way, a recent reports also seems to have opened some way for Pakistanis to impress and extract some business from them. Out of blues has come a consulting HTSPE said to be based in the UK. A workshop held at a hotel the other day has stressed the need for Pak-EU business forum. Further reports will cry tallies how things materialise.
TAIL PIECE:
Bad or good working of any institution or organisation is expected to show some heed to the job was paid but if one is told that WTO cell in Sindh said to have been established in 2005 on instruction of federal government.
In other province, assumingly, the cells set up there have been functioning. Here also report is silent. Why so much hush was observed which led this province to be late by two years. The WTO is mainly related to trade and exports, where activity is most.
Anyway, the sources supposed to have some knowledge about the subject were expecting the Director WTO cell might have been approachable by now or should have spoken about constraints that have restrained the cell to start operation as cells in other provinces have started working. Perhaps any one from two cells in other three provinces happen to go through this report and apprise eager peoples to know details of their efforts so far.
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