Declining stocks position pushes lint price to Rs 5,975, spot rate to Rs 5,625

The new crop cotton is expected by the end of June and the stocks of less than 200,000 bales have to feed the mills, leading to frequent rise in prices - week closing day saw it at Rs 5975. Official spot rate started week at Rs 5550 and ended with a gain of Rs 75 at Rs 5625.
WORLD SCENARIO:
The futures were keeping uppish shape till the weekend when the row between the US and Brazil appeared seemingly to have come to a point to ease. Pakistan failing to reap good cotton crop with imported Bt cotton seed, has at long last made sure to grow disease-free crop. Pakistan has put cotton target around 13.61 million bales. Pakistan produced nearly 13 million bales during current season. The change price was not expected by many but news stemming from Brazil about its last minute agreement set to apply tariffs and lift patent protections on US goods worth $829 million. The WTO had issued ruling against US on complaints from Brazil.
However, very lately Brazil announced it had delayed import duties on US goods to two weeks after getting a proposal from Washington. The US trade representative and agriculture secretary said they hope to negotiate a process with Brazil in a couple of months.
Meanwhile, cotton futures gained strength from outside markets. Market was waiting for monthly supply and demand report, which often proves determining destination. The front month May contract rose by 0.78 cent to 82.28 cents while May contract were quoted last on Thursday down 2.38 cents to 78.60 cents a pound.
On Monday the New York cotton futures finished higher on investor buying amid market talk that managed money accounts will likely increase their positions in the market in the second quarter of 2010. The key May cotton contract gained 0.78 cent to close at 82.28 cents a lb, trading from 81.55 to 82.72 cents. Volume in the May contract hit 7,817 lots. July cotton rose 0.78 cent as well to finish at 83.52 cents and new-crop December added 0.36 cent at 75.46 cents.
On Tuesday the New York cotton futures settled mostly firmer on investor buying as players seemed to be adjusting their positions ahead of the release of a government crop report at the end of the week. The key May cotton contract added 0.01 cent to close at 82.29 cents a lb, trading from 82 to 83.17 cents. Volume in the May contract hit 8,439 lots. July cotton fell 0.16 cent to finish at 83.36 cents and new-crop December added 0.56 cent to conclude at 75.99 cents.
On Wednesday the NY cotton futures crumbled from investor liquidation to close lower as the market stumbled after failing to sustain an advance beyond the upper end of its trading band, brokers said.
The key May cotton contract dove 1.31 cents to end at 80.98 cents a lb, trading from 80.56 to 82.35 cents. Volume in the May contract hit 9,743 lots. July cotton lost 1.17 cents to finish at 82.19 cents and new-crop December shed 0.30 cent to close at 75.69 cents.
On Thursday the NY cotton futures reeled from investor sales to at a seven-week low as the firm dollar and weak outside markets deflated fibre contracts before release of a government crop report next day. The key May cotton contract dove 2.38 cents to end at 78.60 cents a lb, trading from 78.48 to 81.50 cents. It was the lowest finish on the spot continuation charts since February 18, according to Thomson Reuters data. Volume in the May contract hit 25,286 lots. July cotton lost 2.31 cents to finish at 79.88 cents and new-crop December shed 0.21 cent to close at 75.48 cents.
On Friday the NY cotton futures finished at a fresh seven-week low on chart-based selling as the market shrugged off for the most part a government crop report. The key May cotton contract fell 0.53 cent to end at 78.07 cents per lb, trading from 78 to 79.42 cents. On the week, the contract declined 3.43 cents or 4.2 percent. Volume in the May contract hit 18,409 lots. July cotton shed 0.38 cent to finish at 79.50 cents and new-crop December fell 0.22 cent to close at 75.26 cents.
LOCAL TRADING:
Falling supplies sustained rise in cotton prices right from the day one which market sources failed to apprehend. On the very first trading day spot rate was raised by Rs 75, a rare raise, to Rs 5550 per maund. The PCGA report the latest one, has put production at around 12.7 million bales. In the past this quantity was slaughtered several times to show achievement was not possible.
Anyway 4000 bales of cotton changed hands at around Rs 5600 and Rs 5700. Cotton importers have to think twice before doing so because available stuff would be costlier than Pak cotton.
On Tuesday prices held firm as tight supplies were talked on the market. Spot rate was unchanged. Only 3000 bales of cotton changed hands, phutti in Sindh and Punjab was selling at Rs 2100 and Rs 2200. The remaining stock is short near about 0.2 million bales.
On Wednesday sharp rise was again reported which took spot rate to Rs 5625 after raise of Rs 75. Over 10,000 bales of cotton were lifted at prices between Rs 5400 to Rs 5850. Phutti remained stuck up at previous rate. The needs of local mills are said to be quite high but imports are not as easy as used to be in the past. Currency rate has cotton in India costlier.
On Thursday cotton prices firmed amid modest activity when only 2000 bales of cotton were lifted in prices range of Rs 5500 and Rs 5800. The prices may go up further as ginners stocks are depleting very fast - from 0.2 million bales early outgoing week. The new crop is expected not before end of June while less than 200,000 bales are left. The sown cotton also include Bt cotton is not still clear. However, authorities have fixed 13.7 million bales for the coming seasons.
On Friday official spot rate was inert at Rs 5,625, they said. In the ready business more than 3,000 bales of cotton changed hands between Rs 5540-5900. Phutti prices in both the Punjab and Sindh were at Rs 2100-2200.
On Saturday official spot rate was inert at Rs 5,625., In the ready business about 2,500 bales of cotton changed hands between Rs 5700-5975. Phutti prices in both the Punjab and Sindh were at Rs 2100-2200.
SHIPPING RULES BEING VIOLATED:
The representatives of about a dozen export sector, many of them from textile sector have in a lucid detail said SBP shipping rules have been simply violated. They pointed out that exporters are enjoying the rules in Bangladesh without any hitch. In a press conference organised by Pakistan Hosiery Manufacturers Association (PHMA) they said the SBP law for issuance and delivery of bill of lading continues to be violated by shipping companies, agents and fright forwarders (foreign brokers).
The problem is pending since 2002, during which exporters have suffered $500 million loss without any heed to their approach to SBP and relevant departments. The strange thing is that heads of shipping lines when drawn to the fact readily agreed to follow the central Banks rules but at the lower route and for departmental foul play progress in problems resolution.
The exporters are faced with many problems. They are bringing to fore these and unless they will not receive quick response from the authorities how can country's exports, which are perpetually below imports, have to be covered and economy improved. Hand stretched with begging bowl has to be brought to an end.
Often big shots in this country have been taking pride in charity money making this poor nation weaker. As compared to individual who have built huge buildings to live comfortably, country continuously budging onwards to worse shape. Improvement is being talked, let all-round improvement is not only talked out but improvements seen in every nook and corner of Pakistan created for the Muslim who are prey of conspiracies!
BT COTTON VARIETIES:
The Bt cotton is in report these days indeed good for knowledge of the interested quarters. Now there is no likelihood of any mishap. Earlier in confident tone once or twice Bt cotton sowing was reported, only to be later clarified that pest attack was marked, followed by news that seed was imported from some neighbouring country which proved to be spurious.
This time there is no likelihood of any mishap as National Biosafety Committee (NBC) has approved varieties for the upcoming Kharif season. The varieties approved were Sitara 008, Neelum 121, Ali Akbar 703, MG6, FH 113, GN-85, GN.31 and IR-NIBGE 3701.
The cotton sowing season has started: weather the Bt cotton approved seed has also been sown in not clear. The hope is attached the varieties approved worked as desired. The textile exporters need more cotton and more of it of world standard.
The unfortunate part of the story is that growers are put on trial to produce more but buyers exploit the situation by obliging growers to their satisfaction. The Bt cotton when will be supplied in all likelihood buyers will have no cause for importing cotton and losing on this account.
There are always nagging about high cost of doing business but tons of imports have never been regretted. When burnt because of buyers rejection no one has ever taken notice. Now when Bt cottonseed is original and duly approved by Biosafety Committee, it is hoped the production will be higher than cotton was used here and would also be free from pest and disease attack.
TEXTILE MACHINERY IMPORT:
It is very well known fact about our friend China, that it produces from locally available raw material every thing for exports to be world needs. What is still very assertive that it cannot invent, it acquires prototype from wherever required machinery or some products and it gives Chinese shape and local colour, but imports are felt and necessary when raw materials are not available or costs dearer.
The case in Pakistan is painful and loss-ridden. Investment is only heard but the money is available from nook and corner so that failure is luck of others. But fruits are born by the so called industrialist who only has to use his God gifted intelligence and physical ability to dictate others, observed those who have seen industries creeping like insects for the last over six decades or so.
There is some relief that industries earn some fixed amount of foreign exchange and engage untrained and unskilled young men who stay in Pakistan as long as they have failed to get a job abroad. Those who are skilled and love Pakistan and want to come back here to serve this country are subjected to veiled threat to stay out where they are and send back their savings. Not all who have almost settled in lucrative paying countries are of their liking.
This sorry state of affairs is because money not machinery is required so that industry owners design new shape and pattern for such products importers buy like hot cakes. Against this local machinery second hand machinery is looked around to buy which is generally available at throwaway prices. The machinery may be producing products not in demand. The country is beginning to start on ward march. Let it be fast and smooth towards progress and prosperity.
SAVE TEXTILE SECTOR UNTIL ALTERNATIVE FOUND:
In support of someone from the sector that knowledge based viable field is found so that exports do not suffer and the economy remains strong. Such a suggestion was proposed when yarn value-added sectors were locking horns some years back. The leg pulling was strange as the end - harm was to happen to economy and country.
Value-added sectors were running for yarn to save orders in hand. Once again same type of struggle is being waged by the two-or more sectors - yarn export Vs value-added. Once again exports of value-added goods that earns manifold compared with stuff without value-addition. Those who are made guard to look after textile sector, exports and overall interest of the country have always found involved in a bid to save the chair or power. The results now one can see with naked eye, economy needs support of a crutch - which indeed needed repairs. Will the sectors ever learn to live in peace and see, and think their interest lies beyond.
Once again the country is on the verge of total collapse where 18 crore people look baffled in the absence of "ethics". God has given people ways and means to live in prosperity. But they are bereft of fine thinking to share some with those who have been unable to earn two square meals for himself and his family. Under the circumstances a sober and serene thinking on all issue surrounding the country is only way out. The people who earn maximum for this country should think how they can improve the forex earning. The fact remains that high cost of doing business is hitting all. It makes all the more necessary all to sit together so that their joint thinking ensured better earning, prosperity and ever lasting strength to this country thrown in lurch.