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The week under review saw renewed surge in buying and price rise owing to a couple of reasons such as prospect of textile product exports, rains that created fear of damage and restrained supplies and firmer conditions in world cotton markets. But by the end of the week volume dropped to only 1600 bales due to transport problem.
The phutti prices were raised on huge buying in big lots. The spot rate was curtailed to Rs 3900.
WORLD SCENARIO:
Weakening dollar, oil and firmer grain prices and these other way impacted NYCE cotton trading, which fluctuated both ways. Cotton itself lacking strong fundamentals.
On the opening day futures rose backed by investment fund buying as dollar weakened and players were not out of sick feeling about the down grading global economy. The players who dislike uncertainty commenting said that the combined impact of the weak dollar and tumbling equity markets induced investors to gather on cotton market, as in other commodity market, sending cotton to substantial gains - December was up 1.87 cents to 64.39 cents a pound. The boost in futures made players optimistic about surging futures which, however, could not sustained.
On Tuesday investment fund indulged in liquidation obviously because other commodity markets signalled values depressing. Analysts expressed worries as to what extent $700 billion bank bail out rescue plan would be effective. The weekly export sales were under watch, which often delight the players.
On Wednesday the falling trend continued. The world economic turmoil remains uppermost, which only exacerbated the trend on news that three Texas warehouses cotton was damaged by Hurricane 1KE where a total of 127,034 (480Lb) were stored. Now, knowledgeable sources were apprehensive how much of the stored cotton will be okayed for sales. The outside impact remained heavy.
On Thursday cotton futures gained marginally as buying by small investors though other grains were depressed. The players as usual waiting eagerly for news that could inspire fibre contracts. December rose by 0.31 to 61.66 cent a pound. The weekly cotton sale had impacted little despite news being followed about sluggish dollar value, damage by Hurricane, and uncertainties over efforts to bail out the on going economic and financial crisis.
On Friday trading in cotton could not change much trend as it lost following investors liquidation, while the players will necessarily look for banks bail out efforts of administration. Analysts said the market was not even trading in fundamentals of the cotton market. However, December contract fell 1.28 cent to 60.38 cents a pound.
LOCAL TRADING:
The official spot rate showed early surge, ie on Tuesday, as in ready off-take over 20,000 bales of cotton changed hands in big lots. The ginners had developing perception that textile exporters were being provided with a package. The buying support was coming without rhyme. Early two days when prices and spot rate was substantially raised over 40, 000 bales had changed hands.
On Monday stepped up buying by the spinners and millers owing to Eid-ul-Fitr just ahead boosted their courage to raise prices as buying was also indicative of exporters mood. The huge buying bought at prices between 3900 and Rs 4000 per maund.
The official spot rate was held unchanged at Rs 3950. phutti prices in Sindh sold higher at Rs 1925 and Rs 1950 while in Punjab phutti rate ruled between Rs 1850 and Rs 1950. The previous day bulk buying in big size prompted ginners to raise spot rate by Rs 25 to Rs 3975. The most concern with cotton trade became apprehensive about rains, which besides damage to cotton crop in certain cases hold back smooth supplies.
This fact made buyers panicky and reserved. However, a couple of factors combined like Eid holidays and firm condition in world trading have made buyers aggressive. The expectation that authorities may have been considering help to match rivals prices and quality also backed stepped up cotton buying. The phutti prices in Sindh and Punjab were ruling at the previous days levels. On Wednesday transportation problem confronted cotton buyers and delivery size remained small.
The Eid holidays ahead have started showing their impact, which begins from October one to October 3. The spot rate was maintained at previous level at Rs 3975 while that of Sindh phutti were down at Rs 1925 and Rs 1950 while Punjab phutti were quoted between Rs 1850 and Rs 1950. The total known sale was around Rs 13000 bales, which was likely to come down on coming few days.
On Thursday transportation problem continued to show negative impact on the recent panic like sales, resulting in slashing in spot rate by Rs 25 to Rs 3950 while phutti rate remaining almost put in Sindh and Punjab. Under the situation the ginners are more than prepared to sell even at low rate. The millers however now expect normal activity in buying after the Eid holidays. Over 12000 bales changed hands, as the buyers managed their own means of transportation.
On Friday buying showed buyers interest despite transportation problem. Over 10,000 bales changed hands mostly buyers using their own means. They were out to cover their order in hand and hence no respite. Taking risk could cost them heavily. Exporters have exasperated millers problems and they don't feel to lose the opportunity before Eid holidays.
On Saturday trend was downwards as phutti arrivals were strong amid low demand by the mills due to delivery problem. The official spot rate was curtailed by Rs 50 to Rs 3900, they said. Phutti prices in Sindh were at Rs 1850-1900 and in Punjab, the rates were same at Rs 1775-1850, (per 40 kg), they said.
Some brokers said that the ginners were ready to lower prices but the mills and spinners were not able to seal the deal owing the transportation problem. They also said that the cotton market is likely to observe more lethargic sessions ahead of Eid-ul-fitr. Business level was as low as 1600 bales and price dipped to Rs 3850.
DECLINE IN TEXTILE EXPORTS:
It is always expected in view of the nagging about high cost of doing business by the manufacturers and exporters of textile products, particularly. The report quotes 5.78 percent decline in two months of textile products for the reason stated above.
The authorities had always been considerate and offered poor taxpayers money to provide an edge to compete with rivals, they today find hard to deliver exporters whatever they show is their requirement. Or, as is being observed lately, the amount demanded by the exporters is halved or nearly halved to show tight position of exchequer due to still not fixed how many of 16 million Pakistanis should pay taxes.
Lately the authorities fixed a criterion that taxpayers, individuals or the organisations should pay a bit more than what they had in previous years. But the size of demand coming form textile exporters probably has been constantly on the rise. Thus despite textile ministry's recommendations constraint are being felt lately.
However, besides the imports of long staple cotton, figure in totality is given at the end of the season, buying is on the upside by the cotton consumer's, which has surprised people who are asking rather loudly whether exporters are determined to make up the losses suffered since the beginning of the high cost of doing business. The cotton sellers have been reaping harvest per their choice. The crop position, as is usual, nobody is sure of it. That is a secret until the last straw is off the field - both they buyers and sellers enjoy the benefit as and when they felt so.
But ginners and growers remain under pressure and even losers. Unless somebody form government side or from impartial body does the UMPIRING the millers probably won't get cotton the mills need to be fed nor the growers would get the return they feel is good.
Like politics, law and order, Institutions collect taxes, import and exports cotton trade will always be topsy-turvy and progress and prosperity will remain as bad it is today!
LAND OF RISING POVERTY:
How during the last six decades, this country, Pakistan has gone from bad to worse in not that is not known to people. Barring 10/15 percent affluent people who cannot drag out themselves from obscure feeling that strong foundation of palatial buildings exposes the strength and prosperity of Pakistan.
REASON: according to sources who have watched ups and downs in businesses, exports, and other institutions strength of which ensure prosperity of economy and country. They have always been wanting a day when begging bowl has been broken.
They reminded how revenue collectors concentrated on amassing wealth for coming three/four generations. Instead of organisation they enter to build help roads, dams and bridges. At regular intervals, with small gaps, newspapers report about big scams. But a follow up story is always a hotchpotch or deep silence giving edge to the wrong doers.
Thus a complete submission to prevailing wrongs has robbed the house thoroughly, who have turned indifferent making rich richer while poor homeless and without even one complete square meal a day. The poor expected to give quality products to millers without giving their valued labourer training to improve their skills.
Employers always took credit for providing jobs to such and such millions to be rewarded by authorities and contesting any government move to improve the lot of labourers. Poor textile sector suffers much because of care given to growers some of whom can't ensure collateral to banks and have continually been crowding the industrial areas for a job that hardly pay them worth two morsels of rice.
They have thus given blood and sweat to mills to work and give/earn country forex. But they see with heart bleeding lakhs of bales imported from anywhere on earth as if they weather monetary problem and manage inputs and drugs see their crop die without adequate water and roads or carry cotton to markets.
WTO IN TRUEST SPIRIT CAN SERVE POOR WELL:
As the month of November drawing closer, there are some with probably clearer heart who want WTO turn into deal before the US presidential elections. The July talks disappointed many, but the more optimistic told colleagues in whisper, had not collapsed. The WOT chief Pascal Lamy at a get together of the United Nations Conference on Trade and Development (UNCTAD), "in the weeks to come. I am ready to call ministers back to Geneva". The July talks were failure over difference between US and India and tensions between US and China over various issues.
Those who have accumulated wealth, and desired to lessen the excess weight, conceived, WTO, but those, why later nodded unconvincingly added profit against the investment. The poor who are being made to believe they will be gainer if a deal is struck, have so far refused to give more access to their market being pressed by people who eat buttered bread on both sides.
Brazil and India and often China who have been given status of developing countries refused to accept logic presented by developed countries. In a recent BBC interview George Soros, the chairman of Fund Management, who is considered to be one of the plausible erector of the WTO, talking about the shrinking world economy believed wealth accumulation was too big, which "was now sinking". Were the wealth was full of air and unless a channel was not provided in the shape of global trading at par that was about to burst. Who knows the WTO was a gift that is being dragged down or the economic draw down is deliberate that surface after 30/40 years!
COTTON PRODUCTION SHORTFALL CERTAIN:
How heart rending it is that cotton production is being decided much less than target at 14.1 million bales or around just 12 million bales. Allowing reduced production by cutting acreage or water shortfall or waiting for windfall to come to invest and save manufacturers and exporters from being beaten by regional rivals. If not the rains, India is factoring to deter water flow by sheer violating agreement inked in the presence of world class interlocutors, what ever may be the cause exigency demands cotton production must rise.
The growers and ginners have not been as aggressive and are manageable provided their complaint is rubbed out that they won't often are paid leaving minimum return. Their children, of course barring some, often, miss even bare minimum schooling, which has been ill of every thing seen around.
Only recently, after quite some time, ginners resorted to strike for a fortnight. How their demands were met, how satisfied ginners must have been has not been clear. But, when, for whatever reason it is reported cotton production will fail to achieve target, the growers and ginners plight comes to mind and comes to mind quality of local cotton and high cost that become force behind imports of four million bales. The imports, as sources close to cotton trade say, are worse pressured on the cotton sellers to sell cotton at throwaway prices.
Sources have urged authorities, textile exports have to be nursed for some years hoping some knowledge based sector replaces it. The sources believed that cotton, its tolerable quality has to stay is export for their variety of uses. Pakistanis may show interest in imports of cotton, but who can deny that a number of countries fed their mills Pak cotton and earned name and fame in the world.

Copyright Business Recorder, 2008

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