Trading Corporation of Pakistan (TCP) entry, fine weather and smooth supplies, besides reports about bumper cotton crop, were factors that led to good but often cautious buying by wills and spinners on cotton market during the week ending on January 3, 2009. Spot rate saw rise and fall and ended at Rs 3250 from Rs 3125, with a gain of Rs 125.
WORLD SCENARIO:
New York cotton futures regaining its own strength in trading has made players a lot happy who were bothered by uncertainties. They had to wait however to end the spell of xonas and New Year holidays. On Monday, March delivery on ICE futures settled 0.07 cent higher at 46.25 cents per lb.
On Tuesday, late investor buying lifted NY cotton futures to two-month high. March contract climbed 1.72 cents to 47.97 cents per pound. Volume traded was 6,219 lots. On Wednesday, cotton futures maintained surge as investors reluctantly returned to market before holiday break, giving hope of entry into early part of 2009.
The NYCE was closed on Thursday. USDA report about cotton production India placed estimate in 2008-09 to 24 million bales. Relevant players commented they had been having technical rally. However, total sales were slightly down at 100,000 RBs against last week's 119,000 RBs.
On Friday, cotton futures ended with slight loss as a mark high. Analysts hoped the ability of the March contract to finish above 48 cents would eventually peak near 55 cents a pound. March shed 0.11 to 48.97 cents a pound.
LOCAL TRADING:
With the prices trend going up, cotton consumers developed attitude to lean on choice buying, preferring to buy quality lint. On Monday, spot rate was sharply raised by Rs 175 to Rs 3100. Phutti prices rose both in Sindh and Punjab and were quoted at Rs 1500/1600 per 40 kg. Market sources were looking at the rise as TCP entry had assured them to get the low type from it. So they concentrated on lifting better quality lint at sellers' asking prices. There was another version about spinners' pouncing on lint. They were apprehensive about final production figures. However, general belief was that production would be higher than last year.
On Tuesday, spot rate was raised again by Rs 50 to Rs 3150 for two reasons: primarily that cotton will be lifted by TCP, and secondly on consumers' demand for quality stuff. Market sources were, however, of the opinion that consumers had developed fear whether the ruling rate will persist or again rise. Seed-cotton prices also rose and were quoted in both Sindh and Punjab at Rs 1500/1600 per 40 kg. The buyers lifted over 10,000 bales in small lots mainly at prices at Rs 2950 and Rs 3200.
On Wednesday, ginners reduced spot rate by Rs 25 to Rs 3125. In ready, around 10,000 bales were lifted. The asking prices ranged at Rs 3000/3100 per maund.
On Thursday, strong mill demand helped push spot rate substantially up by Rs 75 to Rs 3200, when nearly more or less 20,000 bales changed hands. In Sindh and Punjab seed-cotton registered rise to Rs 1550 and Rs 1700. A quality deal in Liaquatpur was done at record Rs 3400 while rate in offtake ranged between Rs 3050 and Rs 3200 per maund. However consumers were expecting that PCGA report on phutti arrivals, any day soon, would be favourable for buyers.
On Friday, stepped up buying pace was marked as price hike maintained and buyers apprehended further rise. Spot rate rose Rs 100 to Rs 3300 while rate in ready ran at Rs 3115/3400. The prices were pushed higher due to rise in world rates and TCP procurement. Phutti prices in Sindh and Punjab ranged between Rs 1600/1700.
On Saturday, the following deals were reported: 200 bales from Shadadpur at Rs 3210,400 bales from Mirpur Khas at Rs 3210, 400 bales from Nawabshah at Rs 3200, 400 bales from Moro at Rs 3200, 3000 bales from Upper Sindh at Rs 3300, 1000 bales from Liaquatpur at Rs 3250, 1000 bales from Haroonabad at Rs 3300, 600 bales from Bahawalpur at Rs 3300, 600 bales from Burewala at Rs 3300, 2600 bales from Lodhran at Rs 3225-3250, 4000 bales from Jahania at Rs 3250, 1000 bales from Jalalpur at Rs 3250, and 1000 bales from Sadiqabad at Rs 3400
Phutti prices in both the Punjab and Sindh were at Rs 1600-1700. In ready, highest rate was at Rs 3400. Nearly 8000 bales from Sadiqabad were reported at Rs 3,500 on the L-C basis.
According to phutti arrivals figures for fortnight ended on December 31, 2008, released by Pakistan Cotton Ginners Association (PCGA) total above 9.7 million bales had arrived at the ginneries.
DUTY-FREE ACCESS TO TEXTILE PRODUCTS
It would be thumping good news if doubts were not linked to duty-free access to Pak textile products by the EU. However, the news takes part of joy away as the EU has still not lifted anti-dumping duty from Pakistan's bed-linen, hurting exports of this item. Besides, US has not yet finalised reconstruction opportunity zones in tribal areas. Yet, a report from Lahore had some grain of hope that, for whatever reason, the EU was likely to extend duty-free access to Pak textile products. But over a year's efforts in making European Union authorities looks as if dreaming is not absolutely so. A delegation of Pak officials is also "likely" to visit Brussels next month to ensure the facility for textile sector at the earliest. The officials have continued efforts and rightly so to have approached envoys of Italy, France, Netherlands, UK and Germany and they all have assured their support for allowing duty-free export of Pak textile products to the EU.
TCP FINALISES CONTRACTS:
The TCP has entered the market to buy cotton for somebody. At what cost, ultimately depends on how weak is the ruling govt.
SUPPORT OF FRIENDS:
The Industries minister had a meeting with US ambassador. Two things in the discussions were indicative that help was still some months away, or even could stretch further. Minds of authorities here have persistently bothered about honoured promise about reconstruction opportunity zones (RoZs). The Congress had plausibly discussed and had soft corner but a green signal is awaited for a year or so. It has yet to reach here. The friends could put any hurdle in the way of ROZs, say change over US Administration. But a dying man can hardly afford to survive waiting.
Indeed, the newly elected president in that country seems to have been harbouring problem of the countries but still has his team to formalise when to start streaming down expected or demanded support. Unfortunately, this world isn't that happy and prosperous to take a decision offhand. But problems like Palestine and Kashmir have been lurking on, not because any resources at command, but the will. The issues are quite a few but they are not the topic being discussed here. Obama will be in command of the White House and unmatched super power in a couple of weeks. Are solutions Pakistan is in wait, coming any time soon?
UNEXPLAINED INCOMES?
Over Rs 800 million tax received from unexplained incomes. The report should not surprise people. The exporters, who cry hoarse about high cost of doing business, probably know wherefrom unexplained incomes surface after change of govt. The pattern adopted by Pakistan to collect undisclosed assets was also from and Arab (Muslim) country--Egypt. There, tax thus collected had doubled in subsequent years. Whatever Pakistanis are today and own bank balances and assets who should have ethics enough to pay what is due to the state. The exports, particularly of textiles, are in dire straits and month after month are showing gradual decline.
The Egyptian lead in this respect speaks about certain boost, but is quiet whether the system set any pattern providing a lasting solution. In the so-called democratic and developed countries interests do play significant role, but never at the cost fellow countrymen. Six decades have rolled out since Pakistan came into being, and the downtrodden contributed economy and wellbeing of people but a significant majority robbed it of potential Pakistan enjoyed gifted by God. The efforts to uncover unexplained incomes and assets may prove "a huge success", but will it help make our textile products match the rivals anywhere on earth.
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