Millers and exporters continue buying at range-bound prices, Spot rate remains unchanged

Unmindful of ginners plan manufactures and exporters of textile products concentrated on all quality cotton lots available, in view of the high spot rate remained unchanged at Rs 3450 through out the week.
INTERNATIONAL SCENE:
Thanks to successful exploitation of Bt cotton India has overnight turned into one of the leading exporters of cotton, particularly to ever in shortfall China threatening US exports. US cotton traders had already been hit by often facing WTO rules for violation, though punishment remained due to lack of empowerment. Primarily a WTO deal itself needs a political will so far Brazil, China and the US have brought forward cases against the last mentioned.
Indian cotton growers, most sufferers from subsidies have lately come under focus where poverty equals, poverty prevailing in South America and Africa, are hard up to get due price of their main produce cotton and have now been travelling to cities looking for job. The worst hit growers US growers have been raising voice, WTO is asked for compliance panel to evaluate whether changes made to the US export guarantee including GSM-102.
Today India is also victim of subsidising cotton and the US in fore WTO take note of the fact. The market in late last week in NY was hit mainly by outside markets. The Gold rally above $1000 an ounce, besides steadiness in grains (soybeans), world hitting top and sharp drop in dollar, all combined forces pushed cotton up.
Meanwhile, monthly supply/demand report is awaited as usual for a definite direction. The prospect over global economics worried but the players still hoped the cotton futures would rise from 57 cents a pound to 65 cents. Players not expecting surprise of supply/demand report. However, production as is expected to be reported by USDA is being pegged more or less as last month.
On Thursday the NY cotton futures settled with small gains as players sat back to wait for the release of a government crop report next day.
The December cotton contract in New York rose 0.15 cent to end at 60.92 cents per lb, ranging from 60.01 to 61.23 cents. Volume traded in the December contract reached 4,763 lots at 2:45 pm EDT (1845 GMT). March cotton was up 0.15 cent to finish at 63.40 cents, dealing from 62.50 to 63.65 cents.
On Friday the NY cotton futures closed higher on technically motivated investor short-covering as fibre contracts bucked the liquidation pressure seen in most outside markets, brokers said.
The December cotton contract in New York rose 0.32 cent to end at 61.24 cents per lb, ranging from 60.83 to 62.29 cents. Volume traded in the December contract reached 11,542 lots at 2:51 pm EDT (1851 GMT). March cotton was up 0.18 cent to finish at 63.58 cents, dealing from 63.21 to 64.52 cents.
LOCAL TRADING:
The textile manufacturers and exporters seem apparently not happy over first five-year textile policy. Still they are lifting all quality but offered without too much minding about prices. The confused cotton report about bumper crop at time, and attack of pest the other, are difficult to make up mind.
However, after the policy was out, criticism apart, buying has been uninterrupted. This season cotton rate has reached new high- Rs 3600 plus, but prospect the exporters see seem paying. The spot on first day was unchanged at Rs 3450, phutti in Sindh and Punjab was unaltered at Rs 1725-1750 and in Punjab at Rs 1750/1775. Consumers lifted around 8000 bales at Rs 3450-3550.
On Tuesday rates fell under pressure of regular phutti arrivals as monsoon rain gave relief. The official spot rate was unchanged, phutti rates in punjab and Sindh also stayed same as on previous day. The slight downward dip in price pushed cotton buying over 13,000 bales in prices between Rs 3450/3575. Short production of cotton is likely to keep prices here firm. Field news coming is good and boost in cotton out put is likely.
On Wednesday brisk buying activity was apparent on cotton market owing to Eid knocking and in the process nearly 13,000 bales of cotton changed hands between Rs 3450 and Rs 3575, phutti was marked unchanged while spot rate stayed put. The consumers also had before them likely attack of CLCV, which reportedly had damaged cotton crop. Besides, these they know government steps too are gradually coming, which will raise prospects of textile exports.
On Thursday exporters joined millers in lifting cotton who collectively lifted 13,000 bales in Rs 3425 and Rs 3575. Phutti prices in Sindh and Punjab were same. Spot rate was put at Rs 3450. However, cotton production will be lower is being spread saying target will not be achieved.
On Friday rising apprehensions about supply in future kept the mills and spinners on toes to cover the forward buying. The official spot rate was unchanged at Rs 3450. Nearly 12000 bales changed hands between Rs 3450-3575. Phutti prices were same in Sindh at Rs 1700-1725 and in Punjab at Rs 1725-1750.
On Saturday brisk activity was again witnessed, as mills did not stop buying in anticipation of increase in prices. The official spot rate was unchanged at Rs 3450. Nearly 15000 bales changed hands between Rs 3425-3575. Phutti prices were same in Sindh at Rs 1700-1725 and in Punjab at Rs 1725-1750, they added.
WORLD TRADE ORGANISATION:
The WTO, deprived of deal for over eight years, once again was in news-variety of news rather. Originally such a grand gift to the people suffering generations after generation for centuries has been distorted and despite optimism shown by DG Pascal Lamy remains hanging in the thin air.
After a meeting in India recently a new hope has been injected, the deal is expected in 2010. But the so much delay and rigmarole poor nowhere on earth have been longing to have scheme. Even latest meeting, latest in Delhi people were out in the streets to communicate the trade ministers that it should be dismantled. Earlier meetings whether in Geneva or Vietnam were greeted with similar passion.
The reason why the sweet scheme is turning sour is adroitly being turned in a charitable institution. The sponsors had offered poor seemingly for no other reason but to save their manageable wealth. The bargain that started took away philanthropic essence from it. They don't oppose tooth and nail that a free global trade won't be acceptable to them. If at all that should be given a shape in a deal should be the way they wanted.
Today the world is faced with worst recession in decades and many think that ill could be met only leaving the global trade free. Any kind of restriction, domination and hard bargain negated the very desire of the sponsors who wanted to earn some God's blessing by ensuring smiles on the face of suffering poor for centuries!
WILL FINANCES ENSURE DIRT-FREE CULTURE?
Every one in the cotton trade fully knows how much this country has lost owing to lack of investment. Who knows our cotton has made a name as something below standard and importers pay 8 to 10 cents lower compared with buying cotton from elsewhere. For long it is also known that Pak cotton is not as bad, rather, sellers and buyers are found locking horns over prices.
Quite a few enthusiastic made effort to ensure supplies of contamination face cotton. Last name in this regard could be mentioned of Razzaq Dawood who had called leading stakeholders to Islamabad in last ditch efforts to introduced contamination free cotton and create a culture.
But the ginners and growers have their own version why supply of dirt-free cotton culture can be seen nowhere. Ginners have been pretty vocal who made honest bid, according to some, but they were refused to pay their additional expenses, accrued on lint cleaning. They refer to machinery they bought resting some where in some corners of the ginning units. The bid was offered with good additional remuneration to ginners.
Now SBP has announced launching financing scheme for SMEs specially to balancing, modernising and replacement. The machinery should be local made and new. The condition particularly last was necessary. One hopes it will be honoured. Cottonseed crushing machinery installed in the premises of ginning factories would also be liable to avail the facilities under the scheme. The ginners probably on their own had a year back or so visited India, Turkey and Italy to see how supplies of cotton could be bettered so that Pakistan earns better forex. Visits yielded positive results have so far not been heard. Financial facility will do the magic? Interested quarters will sit in wait.
TEXTILE POLICY SROs:
The way first five-year textile policy was received on announcement around a fortnight back, it was a consolation not alone for the textile sector. But the release of SROs on the textile policy as reported have disappointed the industry. When all round appreciation was being sounded, it appeared a freak from tradition to necessarily indulge in criticism.
The policy was quite delayed owing to efforts to take on board all stakeholders, which was a novel exercise. But what the policy has ensured the demand is being placed at the double of the gifted ones. The textile sector has said in a report that the new duty drawbacks with effect from September 9, 2009, have been put at one percent on fabric, two percent on home textile, three percent on garments. They had also a critical look at 2.5 percent reduction in export refinance mark up and five-percent interest distribution on long term on outstanding loans up to 31st August 2009.
Besides these State Bank of Pakistan has introduced another scheme of concessional financing up to three years to 6 percent, 2 percent, 8percent. Five years at the rate of 6.5 percent + 2.5percent =9 percent, 7 year at 7 percent+3 percent=10pc for upgradation and modernisation of technology. The textile circles are of view that the SROs are merely eyewash and would have no tangible impact on textile industry, particularly the spinning sector.
EFFE:
No one can grudge Finance Minister Shaukat Tarin's observation as he correctly underlined the need for effective measures and revised strategies by the government (additionally correctly) and private sector to ensure high GDP growth. Not that no one in past reaches this truth, rather people at the helm of affairs were never tired of stressing similar ideas, but lack of its political will put same on back burners.
This so-called top forex earners sector is undoubtedly if some body is ready to deliver what this sector actually needed. Past week rulers could not lay fingers on the problems and hence developments had always many road block. Unfortunately present foreign minister has come at a very trying time with loads of issues left over since the last decades. Above observation if Tarin stays in place and gets backing of authorities who matter and donors do not come in the way, textile sector may move in the right direction.
The country needs high economic growth for catering to the unemployment and improve income level of the people who have lost purchasing powers with the country's trend not unknown to people, he said. Policy has offered new machinery equipment and modern technology would have to be in place in the industry besides skill development, Tarin said, probably hoping in his heart that he will be able to gift this country and textile sectors prosperity, which is not far off if political will stand behind. Since Tarin himself will monitor the development and implementation one can hope engine has been placed on right track.