The cotton trading maintained low profile. The spot rate, phutti prices stayed nearly unchanged in the absence of consumers. But the world cotton rate resumed upward surge. Spot rate was firm at Rs 3300.
WORLD SCENARIO:
The cotton futures slumped in opening session as funds indulged in selling besides being slapped by cereals weakness in Chicago, not counting the 25 year low acreage. The major players now look for planting conditions report. However, the ICE futures' May cotton contract slipped 2.34 cents to end at 69.36 cents and new crop December declined 2.5 cents to close at 79.12 per pound.
The Tuesday's session futures reversed downdrift as buying was resumed by consumers and trade with strong expectation that the rest of the week will see follow through. The trend setter has changed perception as to how the crop is receiving the support for normal growth and news flash from Chicago about the cereals behaviour. Traders were firm that buyers from China, perhaps, have entered the market and the rest they said is well pronounced.
On Wednesday futures closed a bit weaker as background support failed to mobilise requisite strength. However, the traders were looking eagerly for news from fields about the condition of cotton crop. They hope the direction being awaited hinged on the USDA report. The news from China is still hazy. A buying here and other there could offer an idea but not the support.
The cotton futures behaved quite naturally on Thursday somewhat different from three previous session. The futures not entirely banking on other crops turned mixed as, according to players, dealings concentrated on difference between front months and subdued tone will persist until end of this week.
However, weekend trading turned the trend as values improved owing to switch trade and buying by some small investors. Meanwhile the cotton traders are monitoring spring planting. They noted Texas where half of the cotton crop is planted according to weather pundits weather remained dry. However the ICE May futures contract rose by 0.45 cent to 70.86 cents while new crop December was up 0.57 cent to 81.44 cents a pound.
LOCAL TRADING:
The local trading still visualising about things to come, hold both the sellers and buyers from resuming trading. The buyers in the early sessions stayed speculating some background news will emerge to ease their thinking to lift local cotton. The ginners hope the better days are around. The spot rate continued at Rs 3300 as buying was marked at Rs 3550 per maund. Both the buyers and sellers have constant and deeper look on how international prices are behaving and are adopting stop and buy attitude while sellers seem somewhat under pressure with prices showing quick turn and twists.
Early days were restricted to strictly few thousand bales at the current ruling rates around Rs 3150 and Rs 3550. The report that Indian cotton supplies have resumed may be due to change in price level that has shown erosion in international markets. How the likely Chinese entry into NYCE cotton trading is affecting has to be closely watched.
On Wednesday buying support was visible after two days of low paced inquiry. Nearly 7000 bales of cotton changed hands amid sketchy news whether Indian cotton had started landing at Wagah or was that mere Pak importers pious hope. However, spot rate stayed unchanged at Rs 3300, phutti prices maintained Rs 1200/1600 per 40 Kg prices and asking prices based on quality ruled between Rs 3360/3550.
The PCGA report, expected soon, is likely to show somewhat different scenario. Hence both buyers and seller are subject to wait and see how prices are likely to react after the actual lint production is in hand. The spot rate mhowever, stayed put on Thursday at Rs 3300.
On Thursday April figures released showed 8.50 percent lower production than last year's at this juncture. However, the situation had little immediate impact on prices on Friday, though trading was boosted on perception that prices will go up. Nearly 12000 bales of cotton changed hands at prices ranging from Rs 3110 to Rs 3500. The spot rate at Rs 3300 and Phutti at Rs 1200/1600 per 40 Kg showed little differential.
According to the phutti arrivals figure released on Friday by the Pakistan Cotton Ginners Association (PCGA) report at end March a total of 11.3 million bales arrived at the ginneries for the current season.
The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3300. Phutti prices in both Sindh and Punjab were also same at Rs 1200-1600, they said.
Thousands of bales of cotton were traded between Rs 3110-Rs 3500, dealers said.
Firmer trend was again witnessed on the cotton market on Saturday. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3300. Phutti prices in both Sindh and Punjab were also same at Rs 1200-1600. Approximately 3400 bales of cotton changed hands between Rs3400-3500.
$20 BN EXPORTS UNTIL 2013:
Encouraged by overall improvement in government and hope the country is well on road to progress and prosperity the textile leaders have restarted their activities to deliver what they are expected. Right at the moment the activity is restricted to certain areas they have hurled their muscle with MOU signed with World Wildlife Fund (WWF) aimed at better management practices in cotton crop growing.
The leaders expect this plan for sustainable cotton production will end up in meeting growing demand of textile chains like Ikea, Gap, Adidas, Nike etc through what they call better cotton initiative (BCI). They appear pretty sure that farmers would be able to grow cotton cheaper and cleaner in the absence of which, Pakistan straight away is deprived of nearly one billion dollars annually.
The signing has been spoken of too highly, but the fund burden bearer has not been clear. Nor has any mention of any past experience and achievement been made. The authorities have spared no effort to supply the world with cleaner cotton but hardly any thing like cleaner cotton culture was visible.
The leaders saw revival of industry, being the main source of job creation was a must for sustainable policy. They felt constrained to say that wage raise would affect large scale manufacturing sector and that the export sector would have its feasibility negatively hit by raise.
POOR TEXTILE SECTOR:
The State Bank of Pakistan (SBP) said in its second quarterly report that the poor performance of textile sector was mainly a reflection of sharp slowdown in its exports. The happy news was that over all exports scaled up by 7.9 percent to $11.7 billion while imports grew by 22 pc during july/February 2008 owing mainly to rising international commodity prices coupled with domestic supply constraints of some key commodities.
The report calling it ironical said the deceleration in textile exports was despite the substantially high subsidised financing for working capital, fixed investment and concessional export finance in recent years, which it said appeared to be driven by structural impediments in the industry as well as recent slow down in US demand for textiles. Further causes for the downdrift were supply and operational bottlenecks like decline in fiscal year 2008, cotton harvest, electricity and gas shortages and deteriorating law and order situation.
The poor cotton harvest and resultant growth in cotton prices appeared to be the most critical factor in deteriorating competitiveness of domestic textile. However, knowledgeable sources pointed out that non-textile products exports and some value-added textile items showed extending support to overall rise in exports.
They said the SBP report has however nowwhere mentioned about bulk imports of chemicals and dyes extensively consumed by the textile sector caused the high cost. Of course the textile manufacturing plants imports, though stated have come down around 22 percent, had considerably added in the cost of production resultantly losing edge in competitiveness in exports.
They alleged that Pak exporters are sick of reminding authorities, that India and China have been offering tough competition, endowed with required textile manufacturing plants and companies producing dyes and chemical, in excess to their own needs. Do these help in keeping high cost of doing business low?
HOSIERY MANUFACTURERS GREET GILANI:
The worthy textile matter reports were not carried by newspapers. Or if at all there were one or two, regarding decline in exports, mainly in textile products. Hence the headline attracted for the review statement attributed to Chairman and Vice chairman of PHMA.
Much talked about headlines is 22 percent decline in textile machinery imports, which, relevant sources while agreeing that it improved production and exports, tell seekers that the same cause trade deficit. Exports have never been seen rising so relentlessly as the trade deficit has been. The imports of dyes and chemicals should also be probed whether production locally is uneconomic compared with the imported ones which drain out billions of dollars mostly to rivals whose edge in international markets is persistently grudged?
TAIL PIECE:
It must have sent a cool breeze in textile manufacturers and exporters that held up Indian cotton for sudden jump in prices following signing of contract, has resumed. Looking for without or with reason import of cotton is not in the interest of economy or country. Welcome discussion was on TV channel that cotton growing is being given a pragmatic support by banning (if talks to be taken of face value) sugarcane production in cotton belts.
Country has been made practically imports destinations for good produced worldwide. Note that cotton production cab be improved as land exists and the growers who grow according to request they receive from the authorities. Strong support is required to make this imports house (Pakistan) self sufficient in dirt free cotton. The textile sector, indeed earns maximum foreign exchange but has some body calculated the cost of huge imports of every imaginable stuffs the sector consumes in textile products, knowledgeable circles said.
Comments
Comments are closed.