Trade remains restricted through week due to ginners protest strike against 3.5 percent withholding tax

Cotton trading during the week stayed restricted on ginners refusal to accept fresh phutti, which was to be dearer owing to withholding tax. The settlement came too late to have any impact on business. Meanwhile the spot rate was raised by Rs 200 to Rs 6400 on Friday and there was no change on closing day.
WORLD SCENARIO
Cotton futures lately was marked at 95.80 cents a pound in trading, nearly confirming prediction by cotton experts, that futures will be back around 80 to 90 cents. They had not then in view that US credit down grade from AAA +. The Standard and Poor which degraded US rating and others dreaded another worse economic meltdown not in too distant future. Meanwhile, USDA report about cotton production was awaited where crop had faced unprecedented drought and floods as in Texas and sides of Mississippi.
India where rains were making growers apprehensive took a sigh of relief and very recently invited applications from exporters. Some other countries like Australia, Brazil, Argentina and Uzbekistan too have enough surplus to supply the needs, mainly China. However, India which had held up, sales earlier won't be able to get that fat return instead it is being offered slightly above $1 a pound.
So far China is quiet and would supply local millers. The reserves have to be maintained, therefore, import orders will be released time for which yet to be announced. Pakistan, so ardently dependent on India, had to forsake that country for refusing one million bales bound to deliver under signed accord. Currently this country is rejoicing with confidence that production will meet all its needs. Pakistan hopes to harvest around 15.1 million bales.
On Monday the US cotton futures closed sharply lower on investor sales as the selling spree sparked by the US credit downgrade pulled fiber contracts down and will likely depress values this week. World stocks sank to the lowest level in nearly a year by Standard & Poor's downgrade of the US, with gold soaring to record ground above $1,700 an ounce.
The key December cotton futures on ICE Futures US dropped 3.86 cents or by 3.8 percent to finish at 97.72 cents per lb, dealing from 97.58 cents to $1.015. Total volume traded stood over 14,000 lots, less than half a percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures closed near a 10-month low on follow-through investor sales as fiber contracts struggled from the prospect of weakened demand after the turmoil inspired by the US downgrade. The key December cotton contract on ICE Futures US dropped 1.92 cents, or almost two percent, to end at 95.80 cents per lb, dealing from 93.72 cents to $1.0039. It was the lowest settlement for the second position cotton contract since the middle of September 2010, Thomson Reuters data showed. Total volume traded hit almost 17,000 lots, over a fifth above the 30-day norm.
On Wednesday the US cotton futures settled higher as the market rebounded from a 10-month low, as investors tweaked their positions before release of a key crop report tomorrow. The key December cotton contract on ICE Futures US added two cents to finish at 97.80 cents per lb, trading from 95.76 to 99.03 cents. It was an inside day since the range was within Tuesday's 93.72 cents to $1.039 range.
On Tuesday the contract finished at 95.80 cents in the lowest settlement for the second position cotton contract since the middle of September 2010. Total volume traded hit almost 10,000 lots, around a third below the 30-day norm, Reuters data said.
On Thursday the US cotton futures finished easier on late investor sales after an early flurry of short covering faded, while the trade digested the results of a key government crop report. The key December cotton contract on ICE Futures US fell 1.28 cents to finish at 96.52 cents per lb, trading from 95.78 to 99.36 cents. The range almost matched the 95.76 to 99.03 cents range on Wednesday. The market stayed within the wide Tuesday range of 93.72 cents to $1.039. On Tuesday, the contract finished at 95.80 cents in the lowest settlement for the second position since the middle of September 2010. Total volume traded hit almost 11,000 lots, over a fifth below the 30-day norm, Reuters data said.
On Friday the US cotton futures finished up by their daily limit on modest investor buying as the market's ability to hold this week's low prompted some mills to begin booking orders. The key December cotton contract on ICE Futures US rose by the four-cent daily limit to finish at $1.052 per lb, off a session low of 96.15 cents. On the week, the market is down 1.04 percent. On Tuesday, the contract finished at 95.80 cents - the lowest settlement for the second-position cotton contract since the middle of September 2010. Total volume traded hit almost 10,000 lots, just under a third below the 30-day norm, Reuters data showed.
LOCAL MARKET
FRESH RAINS, STRIKE RESTRAINED DOWNWARD DRIFT
The downward drift in the cotton rate dreaded by the manufacturers and exporters of textile may bring relief. The market operators registered causes for another rain spell and unrestrained strike by the ginners. The government is quiet on the issue. However, somewhat reluctant buyers, lifted 7000 bales in price range of Rs 6000 and Rs 6500, depending on quality. The ginners have been protesting with holding tax. Officials spot rate was at the previous level at Rs 6200.
On Tuesday cotton buying was marked up when 12000 bales of cotton changed hands in price range of Rs 6000 and Rs 6600.
The government has kept silence over levy of withholding tax. The ginners consider additional burden. Government should come out with firm whipping it wanted business or should take back the hated tax.
On Wednesday lint prices remain firm despite global trend showing other way round. Any way spot rate was maintained at the previous day's level at Rs 6200. Consumers lifted over 7000 bales of cotton. The market operators expressed surprise why local lint prices are not coming down. Back to real aspect phutti has been piling up as growers dumped without mounding, ginners are not accepting them. They under protest, must now be worried, as the authorities are not coming forward with cure.
On Thursday cotton offer fell short as the ginners stuck to their protest for taking back withholding tax. Only 4000 bales of cotton changed hands between Rs 6050 and Rs 6550. Spot stayed put Rs 6200, market sources hoped ginners may have been waiting for the likely meeting with PM for settlement of the issue. Globally cotton rate is down but short stock is causing prices to stay firm.
On Friday official spot rate was appreciated by Rs 200 to Rs 6,400. In the ready business over 5000 bales of cotton changed hands between Rs 6150-6600 in process of trading. Market sources said that business was low as a result of slow arrival of phutti because picking operation slowed down in the cotton belt after fresh rains. Rains are good for the crop but stagnant water is causing hurdle in picking operation.
0n Saturday modest trading was witnessed amid slow arrival of phutti in process of trading. KCA official spot rate was unchanged at Rs 6,400. In the ready business, approximately 3000 bales changed between Rs 6250-6500. The seed-cotton in Sindh was at Rs 2700-2800 and at Rs 2800-2900 in the Punjab, they added.
TEXTILE ASSOCIATIONS BEATING AROUND BUSH
The dent in cotton prices created by nearly nosedive have naturally perturbed nearly 16 textile bodies. A roadside onlooker can hardly feel the dept of the problem textile bodies who have pitch dark jungle behind and wall like waves in front. Such a plight as the record achieving associations, had just ended celebration. They were proudly foaming at the gift they had delivered to thinning exchequer. In deed, $13.8 billion out of foreign sales highest in ten decade against last year's $10.2bn, which itself was record against annual sales abroad fetching just $6 billion or around. The fact itself is wisdom provider to the textile associations.
Why and what led to achievement of a record-rising trend in cotton prices, which infused courage among value-added exporters to raise equivalent per unit amount taking the earning to a record. The scenario change has been discouraging and entire textile sectors are overawed how to face the situation. The rise and fall is what life and business is made of. It is praise worthy that bodies have joined heads to find a solution. There is little doubt a way will be found out. The rising trend is world-wide phenomena but the efforts bodies are in lookout are in their grip and their grip alone.
GROWERS SHOULD HEED ADVICE OF AUTHORITIES, MET
The weather changes without announcing so growers are well advised to always be looking for advice from Agri. experts and Met. Office. No doubt growers are well versed in their line but expert's opinion works and adds to their own knowledge. Presently the met office considered useful to advise that largely hot and humid weather to prevail.
Thus Met advised particularly the cotton growers to irrigate their crop as per requirement. The Met has also cautioned against gusty winds, which may be experienced occasionally in the monsoon belt and adjoining areas, mostly in the upper half part of the country during first 10 days of ongoing month. According to Met office monsoon weather system is approaching towards the upper parts. It is likely to cause rain and thundershower in the upper half of Pakistan including central and northern Punjab, Kashmir, Gilgit-Baltistan and upper Pakhtunkawa. Besides these places Sindh is very much on the way of monsoon.
In many parts Met office noted temperature could rise to 45 centigrade including southern Punjab, lower Pakhtunkhawa, Sindh and Balochistan next week due to expected clear horizon. About temperature Met further informed that in the agriculture plains of upper Khyber Pakhtunkhwa and Central Punjab is also expected to surge by 30 C during the period.
WHAT CAIRNS GROUP AIMS AT IN THE FACE OF ODDS
Since 2001, the Doha round has been fixing eyes on December end of the year for festivity following crowning Doha Round with a final deal. But the auspicious moment imperceptibly rushes out leaving one aghast. The full time chief of the WTO Pascal Lamy often mentioned about something aromatic cooking in the side room. But the fragrance was his fancy - the fact was that the end of the year - December the big brains running the complex affairs of the world. Over after a decade intelligent discussion the simple answer to adorn smiles on the lips of have not who abound.
Had there any problem of countries or people who roll in wealth and abundance, the organisation could have taken hardly seconds to surmount truant issues. The Cairn Group now seems determined more than ever, is a unique coalition of 19 agricultural exporting countries with a commitment to reforming agriculture trade.
As the months pass by and another December lurking, it has become apparent that it won't be possible to conclude talks in 2011. The challenge ahead is boggling big minds what can be achieved by the end of the year and what should be done about those issues, which remain outstanding.
Those who attached optimism over months and years to a better world ahead - see it was surrounded with disappointment. A wait may show path to held smiles.
GINNERS STRIKE HURTS BUSINESS SENTIMENT
The ginner's threat to stop phutti buying was extreme step, which if not taken seriously was to hurt trading. The first day's trading showed the effect. The market operators saw slow trend in sale purchase was because of high prices, besides the strike call given by the ginners. The ginners were angry government was realising unannounced tax - withholding tax.
The PCGA chief said but the fact proved otherwise. He pointed out that 3.5 percent withholding tax on Beoparis, middlemen/ Arhathis is in fact on farmers because these people would not pay taxes from their own pockets. Expressing solidarity with the farmers who said they cannot deduct this tax from Beoparis brokers and Arhathis nor they can deposit this amount in the banks on the daily basis.
The ginners speaking on farmers behalf said the country was getting bumper crop after 20 years and its should reach all stakeholders particularly farmers.
According to the market operators, the ginners had stuck to their strike call, which was evident from trading in cotton on August 6, 2011. The authorities who are may - have reaction from ginners should have planned to act in case withholding tax was not realised. The ginners seemed vexed due to frequently changing tax policies that took the occasion to appeal government to introduce a tax policy at least for five years.