Trading on cotton market sustains despite high prices; rates, volumes remain range bound in shortened week

Trading in cotton sustained despite firmer prices world-wide as spot rate indicated on the opening day at Rs 6400 per maund. Prices in ready business and the of take fluctuated moderately and sot rate remained pegged at Rs 6400. At Least for the next four days there would be no business activity, Happy Eid.
WORLD SCENARIO Except set back news from China and Pakistan higher cotton production reports were streaming as prices fluctuated both ways above 89 cents or below. China had some production set back during sowing on weather count. Now this country is tightening belt for harvest in matter of days. China has been very calculative as it ordered good quantity of cotton from India to hold within country prices from going berserk. India the only second largest cotton producer and exporter has lately been showing concern over the neighbouring Pak flood devastation that suffered cotton loss.
India relaxed some control to enable exporters to supply cotton. But the exports to China plus Pakistan threatened cotton prices may hike internally. It has again put some restrain on cotton beyond 5.5 million bales with hope lingering that decision may change.
In the US cotton production was very comfortable, Taxes contributing more than half of the total, had on September 6, 2010, a tropical storm which was likely to spoil not only the quality but also the crop. Futures are keeping at 89 cents and above with other commodities robust support. Pakistan is still in the process survey to announce estimate close to real. The estimate runs between two millions and more. Australia is bulk exporters and has announced very comfortable position as it is expecting best production in five years. Cotton analysts expect to rise around 15pc, while consumption by two percent.
On Monday, the NY cotton futures charged to their highest level in two years as a fresh round of investment fund buying, strong fibre demand and tight supplies conspired to spark the rally after the US Labour day break. The benchmark December cotton contract jumped when trading resumed at 0100 GMT to 91.23 US cents a lb, the highest intra-day level for the second position cotton contract since early March 2008. At 0236 GMT, the contract was quoted at 90.50 US cents after rising to as high as 92.82 US cents. If the market races past 93 cents, cotton would be trading at a level last seen in 1995.
On Tuesday the NY cotton futures ended at a 2-1/2 year high as possible storm damage in southern Texas and market talk that India would delay lifting cotton export curbs fuelled another round of fund buying. The rally took off after the market was shut on Monday for Labour Day. ICE Futures US benchmark December cotton contract gained 1.73 cents to close at 91.18 cents per lb. It was the highest close for the daily second position cotton contract since March 2008. The contract traded from 89.90 to 92.82 cents. Also the loftiest intra-day level for the second position contract since March 2008. Total cotton contracts traded stood at 19,879 lots, down 35.62 percent versus the 30-day average of 14,658 lots, according to preliminary Thomson Reuters data.
On Wednesday, the NY cotton futures finished easier on mild profit-taking after the previous session's 2-1/2-year high, with traders awaiting a government crop report this week to dictate the next move. The ICE Futures US benchmark December cotton contract shed 0.62 cent to close at 90.56 cents per lb. On Tuesday it ended at 91.18 cents, the highest close for the daily second position cotton contract since March 2008. The contract traded from 90.45 to 91.68 cents, within Tuesday's 89.90 to 92.82 band. Total cotton contracts traded stood at 10,213 lots below the 30-day average of 14,488 lots, preliminary Thomson Reuters data showed. Cotton was the best-performing commodity in August, rising 9.45 percent for its biggest monthly gain since February.
On Thursday cotton futures finished with small losses on modest investor selling, players adjusted positions before the release of a key government crop the next day. ICE Futures US benchmark December cotton contract shed 0.10 cent to close at 90.46 cents per lb, moving from 89.95 to 91.62 cents. On Tuesday, the contract ended at 91.18 cents in the highest close for the daily second position cotton contract since March 2008.Total cotton contracts traded stood at 10,467 lots, 27.74 percent below the 30-day average of 14,486 lots, according to preliminary Thomson Reuters data.
LOCAL TRADING Firmer trend in cotton value prevailed backed by international prices despite production world-wide estimated up 15pc and demand keeping at 2pc. Spot rate in Pakistan opened up by Rs 100 to Rs 6400. Cotton buyers pulled courage to lift near by 9000 cotton bales in prices ranging between Rs 6450 and Rs 6625. Phutti Sindh had no major change ruling at Rs 2950 and Rs 3000 while in Punjab it ruled at Rs 2800 and Rs 3000. The buyers seemed satisfied with the prices because quality they liked.
On Tuesday prices showed declining trend but strongly enough buying was also poor because of transportation problem as faithful banked on trucks and busses to visit their loved ones during the Eid. The Railways used to be the major carrier of people has gradually been discontinued. Spot rate was unchanged at Rs 6400. Around 4000 bales of cotton changed hands. The declining that is seen was encouraging to the buyers before the Eid holidays consumers were hoping they will be able to buy some more cotton at lower prices. There were, however, other who were keeping to wail until Wednesday.
On Wednesday prices remained range bound as buyers lifted 6000bals of cotton in price range of Rs 6300 and Rs 6500. Phutti in Sindh was unchanged at Rs 2800 and Rs 2900, while in Punjab it ruled at Rs 2800 and Rs 3000. There was nothing new except forecast about heavy monsoon rains in India and in south of Pakistan. The rains are expected on Eid days which may affect phutti arrivals and quality.
On Thursday firmness prevailed though rains again have started in Sindh cotton growing areas. Spot rate was unchanged at Rs 6,400. In the ready business nearly 9,000 bales of cotton changed hands between Rs 6325-6600. Seed cotton prices in Sindh were at Rs 2925-2975 and in Punjab prices gained Rs 100 at Rs 2900-3100.
CITTON: INDIA'S MOVE AN EYE OPENER FOR PAKISTAN Millions more bales of cotton that India produces for its expanding textile industries are exported to add India's burglar economy tracking China's, should act as an eye opener for this country. India is harvesting conventional cotton besides Bt2 which not only gives much more yield but is immune from pest attacks and diseases. The fact ensures that BT2 cotton production involves much less expenditure incurred on otherwise on its growth and harvest.
Pak policy makers dream for 20 million bales but ends up at the end of the day at around 10-12 million bales. Not that Pak cotton growers are averse to growing cotton up to the size textile manufacturers and exporters need to feed mills contributing maximum forex earning for the kitty. Pakistan, still it seems so miles away from Bt2 cotton to rid this country from importing three to four million bales annually, for the last several years.
Pakistan has been indulging in useless talks that Bt2 will be grown locally. The very current season-2010-11 was talked land to benefit growers, but the devastating floods have completely eroded the optimism. Last year experiment was success full, so was claimed in whispers but in maunds and millions quantity was not made available as visible today as India's cotton export performance being reported.
Pakistan is nowhere on the map. It is not the delay that has washed or uprooted the standing crop but the insignificant talk or to shed tears about, rather future should be in view and the pace with which the neighbours, couple of them next doors have leapt up.
PAK US BUSINESS COUNCIL AWAKENS The Pak-US business council should have stressed earlier upon the United States to provide more market access to Pakistani products on zero rate duly to help stabilise the country's bleak economy caused by floods come in years. The founder chairman of the PAK-US Business Council Iftikhar Ali Malik- while talking to acting Consul General, Richard Jao, also Chief Political Economic Officer, during an Iftar party at the US consulate- urged in strong term for help to overcome the looming economic crisis by reserving Pakistan's quota at par with all the other under developed countries.
The council's efforts are in line with what the nations have been pledging to provide flood, medicines and temporary shelter close to uprooted village people. Malik briefly reverted fine friendly relations between the two countries which at this hour of crisis demand that the US should buy back products from industrial zones in Pakistan. Thus Malik said America can help strengthen the existing industrial zone with provision of modern infra-structure. This however he emphasised should come at the earliest to revive industrial activity besides ensuring durable peace in the region. To draw the attention of acting consul that due to unrest and turmoil in Afghanistan food grain are mercilessly exported to that country leaving behind hungry people in the devastated areas to face the worst.
EU SEEMS TO OBLIGE WITH FREE ACCESS Desperate loud calls by leadership of this country to the EU authorities came slender hollow for allow free access to textile made-ups. But the unprecedented floods had so much appeal them that some moves are in sight before this write up is in readers hand. To be more specific, according to reports an informal meeting in Brussels is expected on September 10, 2010, attended by 27 European foreign finisters, besides EU's top foreign policy officials, Catherine Ashton, humanitarian asset Chief Christina Georgia, development commissioner and trade chief are expected to take part in debate.
What has gained concrete shape to resolve apparently some of them visit to the devastate flood stricken houses, standing crops in the fields and infrastructure trace which were impossible to locate, today scenario change in altogether different. The offer which had been blocked by protest from textile producer of France, Poland and Portugal besides fears of corruption and financial mismanagement pin pointed by even United Nation stand in the way. The WTO rule also stare into the unions eye which can speak loud refusing adroitly the privilege of Pakistan as other nations are abreast of. However at this grace juncture EU is with philanthropic feelings. The pleasant moment with, however, will have to be watched when things take deserved shape.
COTTON: INDIA EASES EXPORT CONTROL FURTHER India is second largest cotton growers of the world after the US and China. India during current season is expected to grow 32.5 million bales against 29.5 million bales in 2009-10. However, earlier imposition of control and the price hike trend world-wide may be behind the decision. Under the circumstance Pak cotton buyers are lucky to buy from India is a question.
There was no one available owing to holiday mood and Ramazan whether India has made available cotton to Pakistan at easier price term or the world rates. However, availability is likely to be enough for exporters who have had orders in hand. As far as price is concerned it is understood that slight benefit will be there. China is itself only the largest producer of cotton but its consumption is very high. Besides America which has been shipping cotton to China, India so far has shipped 60percent of total supplies. Local cotton farmers say would be costlier than previous years. In the meantime Pakistan consumers will be looking to America and commonwealth of Independent States (CIS) for its need.
The deluge that has continued until today has caused widespread loss to paddy and cotton crops. According to rough estimate, which are varied. more or less three million bales of cotton has perished and will have to be replaced by imports from abroad at higher prices. The arrivals in local ginneries have increased pace but prices are keeping high in line with international trend.