Short supplies, high prices in New York push domestic lint rate to 10,000; spot to 9,700

Sharp rises were marked in cotton trading during the week when spot rate reached peak at Rs 9,700, while rates in ready were paid above the spot rate during the week.
WORLD SCENARIO:
Pakistan got a new lease of life as India changed its earlier decision to allow 2.5 million bales exports. This country hit by giant flood had lost substantial cotton crops. And India decided to suspend supplies, blocking accords particularly with Pakistan, which had received only 400,000 bales when suspension was affected. The news is welcome.
Meanwhile China, which is largest cotton producer and yet imports bulk of cotton from mainly the US and India, is over-worried about inflation size. It has been paying little interest in buying cotton. It is hoped as soon as China has firm grip over the bulging inflation, it will look for surplus cotton countries to contact with.
The rising cotton price has pulled back many growers who had bidden good bye and turned to grains, which offered them better return. Such were growers mainly in Africa-Benin, Burkina Faso, Chad and Mali. Another force behind growers return to grow cotton here is pressure on countries spending tons of money over subsidies. The WTO is against this and the move if finally succeeds in holding back both the US and EU from lavish drain on subsidies taking away edge from poorer countries.
On Monday the US cotton futures ended up by their daily limit in light trade as the market seemed to be consolidating ahead of a possible shot at topside technical targets in the next few sessions. Speculative fund buying powered the market as cotton defied a rise in the dollar to a two-month high versus euro. A strong dollar normally pressures dollar-denominated commodities by making them pricier for holders of other currencies. The key March cotton contract on ICE Futures US climbed by the 4.00-cent daily limit to end at $1.1576 per lb, with the session low at $1.121. Volume traded was light at about 14,200 lots, nearly two-thirds below the 30-day average above 37,200 lots, preliminary Thomson Reuters data showed.
On Tuesday the US cotton market closed higher on end-of-the-month investor short-covering as the market ended November well below the all-time highs hit earlier in the month, although analysts said market fundamentals remained bullish. The key March cotton contract rose 1.58 cents to end at $1.1734 per lb, dealing from $1.1376 to $1.189. The contract was down 2.58 percent on the month, its biggest monthly decline since May, Thomson Reuters preliminary data showed. Spot December rose 3.72 cents to close at $1.2623, and ended the month up 0.77 percent. The price of cotton on ICE Futures US stormed to an all-time peak of $1.5723 per lb on November 10, up more than 115 percent since July as strong mill demand from China. Tight stocks and insatiable fund buying powered fiber contracts to their highest level since the US Civil War. At the height of the rally cotton was up 95 percent year to date during the session on November 10, for the biggest gain of any commodity in the Reuters-Jefferies commodity index.
Since then, silver has moved ahead of cotton as the strongest gainer in the index, up almost 66 percent in the year to date versus cotton's 55 percent. Cotton volume on Tuesday was light, with dealings of about 16,100 lots - nearly 60 percent below the 30-day average above 37,500 lots, Thomson Reuters data showed.
On Wednesday the US cotton market closed higher on end-of-the-month investor short-covering as the market ended November well below the all-time highs hit earlier in the month, although analysts said market fundamentals remained bullish. The key March cotton contract rose 1.58 cents to end at $1.1734 per lb, dealing from $1.1376 to $1.189. The contract was down 2.58 percent on the month, its biggest monthly decline since May, Thomson Reuters preliminary data showed. Spot December rose 3.72 cents to close at $1.2623, and ended the month up 0.77 percent.
On Thursday the US cotton futures finished the daily limit-up for the second straight session on modest speculative buying as tight supplies rekindled a rally in the market less than a month after it hit a record top. The benchmark March cotton contract on ICE Futures US rose its five-cent limit to end at $1.2634 per lb, with the session low at $1.2234. Under exchange rules, the daily limit would expand to six-cents on Friday. The volume traded was notably modest at around 16,500 lots, more than 50 percent below the 30-day average above 36,400 lots, Thomson Reuters preliminary data showed. Key May futures on the Zhengzhou Commodity Exchange was last done at 26,200 yuan per tonne on Thursday, up 900 yuan on the day.
On Friday the US cotton futures finished the daily limit up for the third consecutive session on speculative fund buying, but volumes were light and analysts were wary if the rally is sustainable. The benchmark March cotton contract on ICE Futures US rose its six-cent limit to finish at $1.3234 per lb, with the session low at $1.273. After rallying the past three sessions by ending limit up, cotton is again the best performer on the Reuters-Jefferies commodity index, having risen nearly 75 percent year-to-date. That was the case again on Friday when volume hit around 19,300 lots, again almost 50 percent below the 30-day average of 36,100 lots, Thomson Reuters preliminary data showed.
LOCAL MARKET:
On the week opening cotton buyers came under pressure when trading started at firmer prices moving in line with world trend, through spot rate was maintained at the weekend level at Rs 8500. The buying was appreciable at 35000 bales in price range of Rs 8200 and Rs 9000, Phutti in Sindh and Punjab recovered losses sustained earlier to be quoted at Rs 3800 and Rs 4,100.
On Tuesday report from India that cotton accords with that country will be honoured sent a relief wave through cotton consumers here. They bought 25000 bales of cotton in price range of Rs 8400 and Rs 9200. Market sources were not very clear whether Pak importers will get lint at the rate when accord was signed or will be charged at higher rates.
On Wednesday the spot rate rose by Rs 300 in one stretch to Rs 8,800. The consumers lifted 20,000 bales in price range of Rs 8800 and Rs 9200 phutti in Sindh and Punjab was nearly unchanged at Rs 4000 and Rs 4300. This higher rate apart, buyers were contented quality lint was available. Market sources were exchanging perception about phutti still to come in size about 8.4 million bales till November 30, instead of 10.4 million last year during the same period.
On Thursday price in ready off-take sustained rising as sellers felt buyers will lift cotton on offer due to thinking that supplies may be less than demand.
The spot rate was unchanged at peak Rs 8,800. Seed cotton was offered at higher rates in Sindh and Punjab around Rs 4100 and Rs 4350, while stepped up buying was marked as 30000 bales of cotton changed hands in price range of 8900 and 9500.
On Friday the Karachi Cotton Association (KCA) spot rate was raised by Rs 400 to Rs 9,200.Seed cotton prices in Sindh and Punjab were at Rs 4050-4,350. In ready business nearly 30,000 bales of cotton changed hands between Rs 9100-9700.
On Saturday the Karachi Cotton Association (KCA) spot rate was raised by Rs 500 more to Rs 9,700. Seed cotton prices were higher by Rs 50 in Sindh and Punjab at Rs 4100-4,400. In ready business nearly 25,000 bales of cotton changed hands between Rs 9,500-10,000.
INDIA'S SECOND THOUGHT TO ALLOW COTTON EXPORTS?
The latest report from across the border that there is change in official thinking as India cotton exporters are likely to ship less than 50 percent of the 5.5 million bales up to December 15. The Pakistanis under the new policy will get all nearly one million bales stopped earlier seeing low arrival of phutti in Gujrat and Maharastra due to rainfall.
The cotton importers were disappointed to the hilt when exporters informed they have been stopped from making fresh supplies to importers despite accord. The ground given was fear that Indian mills may be left to starve later, it was understood textile ministry officials planned to enter deals directly. In the meantime Pak importers who had finalised deals approached Indian authorities how much shocking and damaging was to deny delivery to Pak importers in view of the flood damages and tight supply position. This tacit appeal may have injected sympathetic feeling for next door neighbours.
According the earlier reports Pakistan was yet to be delivered nearly one million bales. If Indian authorities honour accord, the entire quantity is just half of the quantity 2.5 to 2.6 million bales allowed to be exported. The Pak importers of cotton from India must be overjoyed and waiting for the shipment to arrive. China's attitude to tarry a little to grain firm grip over rising inflation over 25 percent is thought to be behind Indian decision to release half of the held up stocks. Chinese decision may influence price downward.
TEXTILE EXPORTS SUFFER:
The exports have been cherished to rise and further rise, but succeeding governments consoled themselves by keeping the fall of potential country import based. Utmost they have ever touched this sector in reference to outgoing rulers who made no effort to improve the situation. Or they choose ways opposed tooth and nail by stakeholders.
The textile products exporters vast opportunity on the eve of X-mas when products sell like hot cakes. But the orders in hands of Pak exporters slip away to regional rivals where authorities give priority in delivery of gas and power at the doorsteps of exporters in China, India and LDC countries. Irony of facts is too hurting, while Pakistan is under compulsion of world donors, this country has not been granted LDC status.
This bizarre forced scene on Pakistan is leading it to point of no return, Aziz Majeed in deep pang expressed the other day that the government is accepting dictation of IMF just for acquiring one billion dollar loan on hard terms. Without minding the fact that concrete steps to boost our export of two billions dollars during this peak season in Europe and America.
Commenting over purchase of rental power plants said Pakistan had imported a number RPP, which are inoperative for the last two years due to non-availability of gas although we paid billions of rupees from government exchequer. Speaking further he revealed that due to unscheduled and excessive gas and electricity load-shedding in Faisalabad alone most of the industrial units have been closed down thus rendering over five lakh workers jobless. May authorities mend the wrong to break the fetter.
GROWING MORE COTTON:
The slogan such as growing more cotton is more a "ritual" then is backed by some earnest thinking and action send back memories or turn pages of newspapers small headlines unsuccessfully draw your attention for a while to turn to more useful ones. Thus the cotton quantity being produced somehow or the other as much meets the bear needs. The lean kitty cannot but manage to meet the cost of more or less one million bales of cotton import in the name of Standard Cotton acceptable to world buyers of textile products. The first textile policy envisages solid 14 million bales up to 2014. Except in 90s when 14 million bales production had been achieved now it remains merely a cherished desire.
This year the giant flood may have spared just 10 millions bales. The lately harvested cotton crop may have suffered qualitatively. The raw material price has constantly been on the rise. Some gracious moves by the EU for allowing some variety of made-up products with concession have aroused a lot of enthusiasm and manufactures and exporters of value-added products seem very optimistic. They are looking for cotton from any country and at any cost. Such hullabaloo to lay hands on accepted lint and from anywhere.
Once again a seminar in Lahore call has been in the air but coming days alone will answer the way response attached to. The authorities will have to be on guard what so far has led country to depend on imports while disgruntled growers burn cotton is disgust.
AS IF PAK EXPORTERS GIVEN GSP-PLUS STATUS:
Where there is will there is away seem to translate the celebration by Pak value-added and garment exporters in true spirit. Although over 109 countries of the world are in wait for quality products to embrace, Pakistanis cannot see beyond the US and the EU. China indeed avails the prospective markets of the two continents, spares not the African and South American countries. No wonder why this country is called with respect emerging power and its currency is vying to take place of existing leading currencies.
Pakistanis have been offering sacrifices in terms of human lives and pains but the return is where when compared with. After years of struggle the EU has allowed concession for selected version of textile products beginning 2011.
The lowest developed countries (LDCs) were asked to produce certificate that fabrics used in producing garments is local product. Now that ban has been lifted, Pakistan exporters see an opportunity to export fabrics to 14 LDCs, which is evident from celebrations as per reports.
When the celebrations will end perhaps in no time they will find face to face with causes that renders their products uncompetitive. It is assumed that the celebration bespeaks optimism and efforts bring forth results. The Federal Adviser on textile had taken up the matter in EU Commission to change the rules of their certificate of origin, which eliminates the existing two-step process of production ready made clothing. The decision will make main beneficiary.