Modest trading, small fluctuations marked the week; spot rate remains static at Rs 8,500

Modest trading was marked on the cotton market throughout the week where price variation was only in a day or two. The spot rate was same right from day one to the closure of the week.
WORLD SCENARIO:
India is advancing with faster pace towards cotton and textile exports not seen similar gains by any other country. China is a cotton grower of huge quantity and consumer but exports remain nil. Australia, Brazil, Argentina and back to some countries in Africa are growers meant for countries who produce and bank on textile product exports. India announced cotton production higher by 15pc during 2011-12. The heat generated during mid-2011 took cotton prices to a century back $2 a pound creating lust for cotton production, as much possibly countries could.
America had decided to produce more than the current level. But nature has come to hold the enthusiasm cold. Maximum cotton producer Texas has been facing continued drought and currently Mississippi river is over flowing both sides of the river washing away standing crop. In that country growers are getting ready to collect insurance money.
As the things appear America is unlikely to remain sole exporter to China. Naturally India and other countries with surplus cotton will ensure survival of the mills. Pakistan is getting green signal from the EU to get free access to the EU markets. The fact has pressured for looking for raw cotton surplus areas beside stocking whatever is locally available, fresh developments calling loudly Pakistan textile exporters on the edge of $14 billion, so far highest.
On Tuesday the US cotton futures finished at a four-week high on investor buying as a historic drought did not let up in the key growing state of Texas during the long holiday weekend. The cotton market was closed on Monday for US Memorial Day. The benchmark December cotton futures on ICE Futures US went up the six-cent limit to finish at $1.355 per lb, with the day's low at $1.30. It was the highest settlement for the third-position cotton contract since May 4. Based on that third-position contract, cotton posted a gain of 3.49 percent in the month of May. Spot July cotton also went up the six-cent limit to close at $1.5867.
On Wednesday the US cotton futures finished at a fresh four-week high, as a severe drought in the key growing state of Texas easily wiped out early losses from poor US economic data. The benchmark December cotton futures on ICE Futures US went up 1.77 cents to finish at $1.3727 per lb, dealing from $1.3194 to $1.3848. It was the highest settlement for the third-position cotton contract since May 4. Spot July cotton climbed 2.30 cents to conclude at $1.6097 per lb. Total volume traded reached almost 26,000 lots, almost 50 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Thursday the US cotton futures finished at a month high on investor buying sparked by the worst drought in a century in the key growing state of Texas. The benchmark December cotton futures on ICE Futures US went up 1.96 cents to finish at $1.3923 per lb, dealing from $1.3381 to $1.395. It was the highest settlement for the third position cotton contract since May 3.
Spot July cotton climbed 3.27 cents to conclude at $1.6424 per lb. Total volume traded on Thursday reached over 32,100 lots, almost double the 30-day norm, Thomson Reuters preliminary data showed. Volume traded in the cotton market during Wednesday's rally stood at 28,770 lots, ICE Futures US data showed. Open interest in the cotton market was at 158,298 lots as of June 1, its highest level since April 20, the exchange data showed, and a seeming indication of renewed investor interest in the cotton market. The December contract has traded over the 200-day moving average at $1.3137 over the last two sessions and is taking aim at the 100-day MA at $1.5206, according to Thomson Reuters data and market dealers.
On Friday the US cotton futures settled lower on investor profit-taking after surging to a month high due to the worst drought in a century in the big growing state of Texas. The benchmark December cotton futures on ICE Futures US fell 0.53 cent to end at $1.387 per lb, moving from $1.3725 to $1.409. On the week, the market is up 7.1 percent.
On Thursday, the contract finished at $1.3923 per lb, the highest settlement for the third position cotton contract since May 3. Spot July cotton dropped 2.61 cents to conclude at $1.6163 per lb. The National Drought Monitor said in a report on Thursday that more than half of Texas is experiencing "exceptional" drought. Open interest in the cotton market was at 160,725 lots, as of June 2, its loftiest level since April 20, the exchange data showed, and a seeming indication of renewed investor interest in the cotton market. Total volume traded on Friday reached almost 23,400 lots, more than 40 percent above the 30-day norm, Thomson Reuters preliminary data showed.
LOCAL TRADING:
Perception that cotton prices were on the verge of hiking even further, textile millers showed interest in buying to save some. The spot rate was left unaltered at Rs 8500, as 2600 bales of cotton changed hands at Rs 7700 and Rs 9000 depending on quality, phutti rates of inferior quality was marked at Rs 2500, and the of fine was doing at Rs 3000. However, drought in Texas and floods in Mississippi are giving vent to firmer prices to rule.
On Tuesday the business was marked on the second day as price sustained on the higher side. Only 2000 bales of cotton were done at Rs 8000 and Rs 8600. The textile millers staying cautious went on lifting so that exports pace was maintained. Slight set back being marked was only to catch what the budget 2011-12 offers them. The favourable development seen on the market was sellers were in rather rush to liquidate stocks before new crop arrival.
On Wednesday, trading improved on the market where 7000 bales of cotton changed hands, which traders said was choppy. The spot rate stayed put at Rs 8500, phutti rates too were almost unchanged. The cotton changed hand at Rs 7500 and Rs 8600. The buyers lifted their immediate needs disappointed to see sellers at their tough attitude. In global markets futures are once again showing gradual rise America is held up due to drought and floods. Only India seems to have been increasing the size of the sowing acreage.
On Thursday spot rate was again marked put at Rs 8500, phutti low type was unchanged at Rs 2500, while the other type ruled at Rs 3000. In ready take off some 3000 bales of cotton changed hands at Rs 8500 and Rs 8700. The world cotton rates are also looking up owing to floods and drought hitting hard in some places producing bumper crops. However developments in N Africa, ME and Japan have been telling leading to loss in cotton demand as before.
On Friday pre-budget anticipations gripped the cotton market participants adopted wait-and-see attitudes due to announcement of budget 2011-12 speech. KCA official spot rate was left at the overnight level at Rs 8,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business, no trading activity was seen as most of the participants were busy in exchange of views over the federal budget. There are some kind of uncertainties over the budget, as most of the traders were expecting some positive news for textile sector.
On Saturday modest trade was seen on the cotton market during post-budget session. The KCA official spot rate retained the overnight level at Rs 8,500. In Sindh and Punjab phutti price of low type was at Rs 2500 and that of superior type at Rs 3000. In ready business, prices showed modest rise as nearly 1000 bales changed hands between Rs 8500-8950
RESOLUTE DEFENCE OF TEX SECTOR CONTRIBUTION:
Authorised should look deep into both statements - by PIDF and CAPTA chief as one or the both may have indulged in a little excesses without deeming so. The PIDE in CAPTA words is an institute of such repute the Pakistan Institute of Development Economics whose members are knowledgeable people, beside the size and contribution of the textile sector can never be viewed as such. All the wrong and pangs are created by very small sentence picked up from a statement, which speaks "the net contribution of textile sector is negative".
The CAPTA chief has proved in detail in varied ways textile sectors contribution to economy and whatever progress one can locate. While complaining about issuing lengthy statement without exercising homework. He showed pleasure in pointing that textile sector in Pakistan is documented 100 percent. The sector contributes 54percent of nation's total exports and generates 42 percent of much needed employment. He narrated dozens of credit claimed by the sector, which while speaking about the sector should find in elaborate expression.
The way sector has to fight out to survive and helps to strengthen national kitty and economy should not lose sight of anyone. The high cost of doing business is heard nowhere in the region greater than Pakistan. India and China mopping away Pak markets. Despite tough competition pushing the export to $14bn needs to be appreciated whether appreciation finds way nowhere is not for the negative contribution, but, assumingly the progress sector should have made in decades. If any response is derived in this matter will clear PIDE position.
RGST TO HIT HARD AGRI PRODUCTION:
The Kisan Board Pakistan (KSB) has turned proactive lately tasked with intrinsic responsibility to guard grudgingly natural rights usurped by Budgets and Taxation measures without pace of time and respect. Some may argue it may not affect necessarily people already within below poverty level. But the KSB had strenuous exercise for rustics that RGST on Agari machinery and other inputs will hit farmers per acre cost of production by 10 percent.
It is here that cotton and textile very much agri products turn a forbidden fruit in the long running exclusively Pak markets in foreign countries. Regional rivals China and India intruded inalienable Pak markets. Not a day passed without parting with some dearer articles to the state. Problems of raw material and related matters, besides power and gas are not regularly available.
In Faisalabad, truly a hub of textile related products has been practically no gas and power three days in a week. The KSB expressed disgust as billions of aid money from foreign countries failed to reach deserving farmers.
The KSB secretary information taking slightly different subject pointed out that how farming community has not only ensured food security for the country but it was contributing billion in direct taxes every year. The KSB office bearers pleaded for taking care of farmers by effectively holding prices in check instead of leaving on the mercy of traders and dealers.
ST EXEMPTION ON GENERATORS IMPORTs:
As the Budget day knock at the door, the authorities view the utterly sudden Sithdrawal of SRO 448(1) 2011 to restore ST exemption on import of generators. Additionally slacked are businesses as to why such a decision was considered days before 2011-12 Budget.
The Chairman KCCI hastened through a communication to FBR chairman drawn his attention towards serious problems being faced by the PMMG members and general public due to sudden withdrawal of ST on generators not manufactured in Pakistan, surprises as he seems takes pains to draw attention of the FBR, days before Budget pointing to a painful fact KCCI chief feels constraint says government neither produces the level of power required to run the industries nor helping the entities trying to find solutions. He said the country has already faced a loss of Rs 2.5 percent of the GDP because of power crisis not in sight.
He recalled that the government showed great mercy by admitting the fact and its potential adverse impact on employment, manufacturing and services sectors, cotton industry, micro businesses, shuddered as chairman seemed he went to say now it seems that total business is on old and the wheel of economy has no way to move further.
Chairman finally tried to impress on the authorities that in the wake of prevailing energy crisis in the country due mainly recent devastating floods the government should encourage people to produce power required to run industries in then designated capacities.
PAK TEX INDUSTRY NEEDS SUCCOUR, DEAR SIRS!:
The European Union seems to be pretty keen to learn Pakistan edged closer to EU duty waiver. The Pak textile industry in tight corner hit by devastating floods was in quest of lucrative easy accessible country. The authorities in the EU consulted individual members who nodded in affirmative. The waiver request. Thus received by majority, authorities sent the plea to WTO and was nearly perceived cleared from the global organisation around early January 2011. So at least friendly EU authorities had conveyed to Pak exporters hanging by a thread.
Instead of at message from WTO that it had allowed waiver, some adversaries emerged who had expressed their opposition. In the process EU Parliament with good backing from the powerful members of the Union meanwhile added to the voice making go ahead a little louder. Pak exporters who had expedited manufacture of varieties for exports again, shipped to countries looking for the same. This write up is follow up of the EU fresh message that Vietnam in the meantime has taken back its reservation and, Peru, other country with reservation is shortly communicating with the WTO to allow Pakistan to let textile goods stream out to the EU. Actually these two countries who may or may not be well-versed with Pak existence okayed when relevant cause for the waiver came to light. Why when leaders were in India to see final cricket match in that country along with leaders of India did not open the case to forget and forgive heart burning and trade minister be asked to vote yes when it reopened. However, at the end of the tunnel seems all is well and Pak exporters will soon hear from the EU-waiver allowed.