Business volume remains low on domestic market despite prices down trend, drastic cut in spot rate

Lifting on cotton market seen in low pace despite consumers keep hoping prices to turn lower and lower, spot rate slashed by Rs 1000 to Rs 9500 during the week ending on April 29, 2011. Surprising sharp recovery witnessed on US cotton market on last day of the week.
WORLD SCENARIO
Pakistan to take up cotton import issue with India, following usually showing back to honour supply despite duly signed accord. The excuse was lame that weather was unfair and spoiled standing crop in the field. The world, however, had seen the backing out from due supplies was ever rising cotton futures prices globally. Besides this move to mould textile exports by India, that country will be requested to withdraw its opposition to the proposed European Union Trade concession offered to Pakistan. Australia is cheering for better cotton production this season. It can feed hungry for cotton country, from any particularly China. China announced its policy some days back to start buying cotton and reserve.
They are conscious of firmer cotton prices unlikely to dip in near future. The United States has exhausted stocks and is likely to decide to grow up 13.8pc from 11.04 million planted in 2010. The soaring world prices are prompting people to grow other fiber including bamboo fiber. Pakistan upset by Indian refusal to honour signed contract has been in advance talks to supply Pakistan with nearly one million bales, covering the supplies refused by India on pretext of damage. Meanwhile, Burkina Faso cotton growers have been protesting about low prices, demanded more pay besides threatening peasant revolt.
On Monday the US cotton futures finished mostly higher, with May cotton deliveries strong and droughts threatening the December new crop, but July was pressured from export cancellations overhanging the market amid new supply coming from Southern Hemisphere growers. Deliveries began on May cotton on ICE Futures US, pushing the contracts up 1.41 cents to finish at $1.8822 a lb. Most-active July slipped 1.12 cents to end at $1.6622 per lb., not far from the session low at $1.6522. New-crop December cotton was up 1.82 cents to finish at 1.3380 cent per lb, a 1.38 percent increase. The July contract was down as demand wanes amid export sales cancellations overhanging the market and movement of huge crops coming available in Australia, Brazil and Argentina.
On Tuesday the US cotton futures slid to their lowest levels in 2-1/2 months, closing at their downside limit with ample supplies for waning demand, and caution ahead of the US Federal Reserve's policy meeting. Analysts said many commodity investors were nervous and the sidelines ahead of Wednesday's Fed policy announcement. US Federal Reserve officials will continue their two-day policy meeting on Wednesday. The market is weak and July futures just came off more than the others.
It's mostly economic issues, as people are skittish about the growth outlook and chatter about raising interest rates," said Bill Raffety, senior analyst for futures brokerage Penson Futures in New York. Despite deliveries being under way for May cotton on ICE Futures US, fell a steep 6.24 cents to end at $1.8184. Most-active July futures slid 6.0 cents, the downside limit, to close at $1.6039 per lb., a 3.61 percent drop. New-crop December cotton lost 4.52 cents to settle at $1.2944 cents a lb., a 3.37 percent decline.
On Wednesday the US cotton futures finished sharply lower, with the benchmark July contract ending at the downside limit, and despite the Federal Reserve's essentially unchanged policy, the market's supply glut pressured prices into Wednesday's close. Many players sold cotton along with other commodities in a measure to lower risk ahead of the US central bank's policy-setting meeting. July cotton futures fell by the downside limit in early morning business. Once the Fed issued its communiqué that pledged to maintain an exceptionally low interest rate policy for an extended period. "July has a heartbeat, but just barely," said Ron Lawson, Managing Director of logicadvisors.com. Most-active July cotton on ICE Futures US, tumbled 7.0 cents to settle at their downside limit of $1.5339 per lb., a 4.36 percent decline, despite fleeting attempts to bounce off the low after the Fed released its policy statement. With May cotton undergoing deliveries, it slid 6.95 cents, or 3.82 percent, to finish at $1.74 per lb. New-crop December cotton closed 4.84 cents lower at $1.2460 cents a lb., a 3.74 percent drop.
On Thursday the US cotton futures were mixed, with nearby contracts falling and later-dated futures firming after steep selling in day-earlier business, but ample nearby supply was hurting May and July fibre prices. Most-active July cotton on ICE Futures US finished 1.37 cents lower at $1.5202, a 0.89 percent decline, after falling to the downside limit a day-earlier. New-crop December cotton was up 1.98 cents, or 1.59 percent, at $1.2658 cents a lb. at the close. May cotton, which is undergoing deliveries, was down 2.07 cents, or 1.18 percent, to end at $1.7282 per lb. Thursday began with open interest of 5,350 lots for the May contract, only a slight decline from the 5,674 lots open as of Tuesday. Yet, delivery notices issued to date have been light.
On Friday the US cotton futures rallied to daily limit, chalking up steep gains for the last day in April, along with most other commodities, as many investors rotated into hard assets believing the US Federal Reserve would keep money cheap for awhile. Most-active July cotton on ICE Futures US closed with 6.0 cent gains, the upside daily limit, at $1.5802, a 3.95 percent increase. New-crop December cotton rallied 4.35 cents, or 3.44 percent, to $1.3093 cents a lb. by settlement. May cotton gained 5.96 cents, a 3.45 percent rise, to end at $1.7878 per lb. Analysts were puzzled by the sharp gains in May, which expires on May 6 and is in the middle of deliveries. Only 167 delivery notices have been issued to date. Yet, open interest in the May contract still seemed high, with 5,229 lots at the start on Friday, for a contract that has been in delivery period all week. Open interest declined only minimally from 5,350 lots at the end on Wednesday. For the benchmark July contract, the session began with follow-through panic selling, but brokers noted that the selling eventually ran out of steam. "It took very little volume to establish a 1,000 point range to get July back to the upside," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
LOCAL TRADING
Lean business was apparent on the cotton market as sellers were victims of their perception who link local rate with prevailing world one. The spot rate was, therefore, marked unchanged at Rs 10,500. In Sindh and Punjab phutti price of low type ruled at Rs 3000, while the better one was prevalent at Rs 3500. In ready section 400 bales changed hands priced between Rs 9000 and Rs 10,000 depending on the quality. Some cotton consumers attempted buy lent others restrained waiting for some imports at-cheaper price, perhaps from Uzbekistan.
On Tuesday lint prices turn sharply lower as ginners decided to liquidate low quality lint apprehending increased pace in arrival and prices sliding down as a result. Keeping consumers conscious spot rate was maintained at the overnight level. Phutti prices too were holding previous day's level at Rs 3000 low quality and better one at Rs 3500. Contrary to the psychology, low buying was marked around 400 bales at Rs 8000 and Rs 9000 depending on quality.
On Wednesday prices were favourable for buying but being over sure buyers stayed away for further losses in prices. However, slight boost in buying ie 1300 bales changed hands in price range of Rs 8900 and Rs 9800, phutti in Sindh and Punjab ruled at Rs 3000 and Rs 3500. Spot rate stayed at previous level at Rs 10,500.
On Thursday spot rate was drastically cut by Rs 500 demonstrating down drift in prices plus globally to Rs 10,000. Phutti rate was practically unchanged, while 4000 bales of cotton changed hands in price range of Rs 8200 and Rs 9800. Local players were now straining perception whether prices are inclined to giving in various adverse political and economic factors globally to impact demand.
On Friday panic selling by ginners eased prices. KCA official spot rate was downed by Rs 500 to Rs 9,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business nearly 3200 bales of cotton changed hands between Rs 7,900-8500. Market sources said that several factors caused continued fall in the cotton rates. They said that basic factor is lack of interest by the buyers and rising expectations for decline in the rates as prices went up during the last four-six months due to speculative buying in the international markets, which pushed the local prices to hit the record high level. The mills are sidelined in anticipations of fall after the decline in the global market. Second major reason behind the thin business is expectations for bumper crop for the coming season.
On Saturday sharp recovery in the NY cotton futures aided the prices to resist fall. KCA official spot rate firmly held the overnight level at Rs 9,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business nearly 2000 bales of cotton changed hands between Rs 7,500-9000. According to the market sources, during the week, prices were on downward revision, but last trading session of month of April, rates stabilised following the NY cotton market track. Furthermore, increase in the NY prices, encouraged the ginners as they were not interested in bringing down the prices of fine quality, still hoping for handsome recovery in the present prices to gain profit, experts said.
SPREAD OUT INVESTMENT TRADE INFORMATION
The call has come late, but contains requisite force to disseminate information about prospects Bangladesh has for Pakistan. A little over a week back, BD diplomat at a function in Lahore had given similar call but as usual that fell flat, in the way Chinese help offer was cold shouldered. How Chinese could help, exporters of textile products ragging all the tunes for high cost naturally unacceptable in the face of cheap products available elsewhere.
Like Chinese, BD brothers have not lost hope and extended even warmer investment and trade expansion. Months back reports were frequently read in newspapers Pak textile exporters are bound for BD to run business side by side BD and Indian exporters already gaining from prospect BD offered them. The seriousness the two offers coming without such gap seems to have much substantially silence in this country aroused curiosity to know the motive behind yielded in orders in hand for availing the EU duty free access and some even hinted the US similar windfalls any time. The "gift" BD friends are offering is spontaneous and long lasting.
PAKISTAN LIKELY TO WIN 'GSP PLUS' STATUS
The 'likely' is the word, which soured otherwise sweet taste that filled mouth as a newspaper report headlined Pakistan to win GSP plus status. This story as told by Australian ambassador that Pakistan was likely to win GSP plus in next EU-Pak summit. The story was pretty confusing.
Pakistani exporters particularly were staring at the European Union trade package buying on lot WTO body led since December 2010, January 2011. It can however, be assumed that Austria has strong 'yes' for the trade package. But, it is better for the time being, we must concentrate on offers with love of Austria.
The country with pride informs Pakistanis who for the last many decades taken pride in keeping full of potential country as "consumer market". China tried in the past to arouse the sleeping people to work and better exports, but so far they look friend, to rescue them from never ending high cost of doing business. Now, Austria, unaware of the psychology is giving call to join highly advanced industries such as construction, machinery, chemicals, food, lumber and wood processing and paperboard. Most of above items intensely are needed to drive away as far as possible the nagging related to high cost of doing business. Will Pakistanis accommodate the Austrians in joint ventures for machinery, chemicals, which drain out most earned.
HEED IT'S FOREIGN EXPERT'S ADVICE
With the advent of 2011, even president took it for granted to ask growers to take the size to 15 million bales. An international conference titled "breeding crops for stressed environment" was addressed by Professor Dr Rab W Bid. Expressing his view Dr Rab said cotton crop leaf virus is likely to play havoc with the crop. He cited virus was responsible for damage to crop in Pakistan amounting to billions of dollar.
He was silent whether CLCV cure has been found on earth, since the conference had to look into dozens of serious issues any country through specific cause was not mentioned but how easily virus makes way into any country is through transportation. The inroad can be deterred by a bit of care, but living alert and careful is nobody's job. Pak borrowed CLCV in 1988 in Multan, major cotton growing area-taking toll of $5bn.
Keeping CLCV away is also quite easy but needs more than just care growers have to root out affected plant completely. This cumbersome job proved too much when disease had hit large areas. God is merciful but scientists have to strain mind and body to strike hard with inventions. Or, seeds of BT2 in healthy condition have to be acquired from genuine stock holders so that disease free yield and larger quantity is ensured, compared with other local seeds. Countries growing cotton are planning to go for more cotton with fear high timed rate with disturbed condition globally may plummet.
DOHA TRADE DEAL IN SERIOUS DOUBT
Those light hearted people, who matter in conceiving a world with smiles and two square meals, remain committed to finding a productive path forward. But Doha trade deals after over a decade discussion at different venues and various roofs is still in a serious doubt. Great thinkers may have been hoping a day when WTO conceivers will get deal signed. But destitute living hand to mouth through centuries has learnt to look suspiciously the die-hard philanthropic.
The two dominating groups juxtapose interests, the poor and more deserving for whom was WTO supposed by conceived was out of focus. The WTO conceivers play with time, money and end result, are not losers. To cite a few more factors besides the hitch visiting dream trends and new making new intimate companions, most of these powers have already been bound in accords like BTA, FTA and like accords.
The question is whether WTO has already outlived its utility for those who make and unmake things. Pascal Lamy a very dedicated WTO nurse urged the 153 member states of WTO to think hard about the consequences of throwing away a decade of solid multilateral work. The full membership is scheduled to meet on the 29th of current month to begin our collective consideration of the next steps, Lamy said. The world for its rigid and unbalanced thinking is still uncovering what led to global economic downdraft. Who is bothered who world over suffered?