Cotton: Prices in the cotton market have been largely stable this last week as demand from millers remains a driving factor behind domestic consumption. Overall trade volume has been strong, with some 24,000 bales changing hands on Thursday, going for between Rs 5700 to Rs 6200 per 40 kg.
A smaller than expected domestic cotton crop has helped the business pick up, and also enhanced the foreign imports, with cotton of Indian origin being currently favoured by local mills. Official spot rate at the close of business on Friday was reigned in at Rs 5,900. And as demand for Pakistani yarn from the Chinese quarters skyrockets, analysts predict that sustained buying is likely to continue into the next week as spinners stock up. However sources maintain that arrivals are likely to remain steady in the coming days but if demand wanes even slightly, rates may show significant weakness by the same time next week.
As of Friday, low type phutti prices in Sindh were around Rs 2650 per maund whereas the better quality was going for slightly lower than usual at Rs 2850 per maund. In Punjab, however, the prices were slightly lower, with the low quality seedcotton selling for Rs 2600 per maund while the better quality was going for Rs 2950, Rs 100 lower than the rates from earlier this week.
On the International front, concerns over global demand and economic uncertainty have continued to weigh heavily on major agricultural commodities as global cotton prices continue to hover below the 80 cents/lb mark for much of the last 6 months.
Cotton futures on the NYCE closed on a 2 week high as other commodities also witnessed gains in prices. Closing at a session high of 71.85 cents/lb - the highest in the last 17 days -the hike seems to ignore the Department of Agriculture, which raised its inventory forecast for the current season to more than 80 million 480-lb bales. Reuters reports that the benchmark December cotton contract on ICE Futures US hit 71.63 cents on close of business on Wednesday.
Rice
As local traders and exporters rush to fulfil their previously made commitments to the Chinese buyers, prices for the white long grain variety have been much stable this past week.
Traders maintain that orders from other markets such as Malaysia and West Africa- both of which were important destinations last season- have been slow. Moreover, exporters are also concerned at the lower sales figures for Basmati rice compared to last year and have been eager to increase business during the early part of 2013.
Total Basmati sales between the beginning of July and the end of October have been recorded at 174,144 ton- representing a decrease of approximately 44% from the 337,477 tons that was sold during the same period in 2011. This, though, does not include the unofficial border trade that has been on-going with Iran and Afghanistan.
Sales of non-Basmati up till now have also been slower this year, with the amount sold between July and the end of October reaching 471,189 tons, compared to 524,480 tons last year as a result of slow arrivals.
Sugar
The wholesale prices of sugar followed the downward trajectory for the second consecutive week with prices hovering around Rs 49-52 per kg, across the country.
According to a market source, a total of 7 mills have commenced their crushing operations - 3 mills in Sindh, 2 in KPK and 2 in Punjab. The rest are expected to initiate their operations after 10th of Muharram while, 29 mills in Sindh and 4 mills in Punjab have illuminated their boilers. The prices are expected to drop off further as the crushing season gains its pace.
Accompanied by a sugar surplus of around 1.2 million tons and the expected sugar yield of 5 million tons which is already nibbling the millers, India, one of the key export markets of Pakistani sugar, is mulling over imposing a 10 percent anti-dumping duty on Pakistani sugar to protect the domestic producers. This would increase the import tax on Pakistani sugar by 100 percent and lead to a whopping decline in Pakistan's sugar exports. Moreover, Iran has also turned down the import of refined sugar from Pakistan so as to sustain the domestic industrial activities.
The above discouraging factors coupled with a bearish drift in the world sugar market on account of better yield in Brazil, China, Thailand and Russia are pointing towards a further plunge in local and international sugar prices.
The global sugar prices which dropped by 18 percent this year are anticipated to remain gloomy because of the growing world surplus. According to the latest ISO forecast, the world sugar surplus rests at 5 million tons and 2012-13 global production forecasts rests at 177 million tons. With the global demand forecast of 172 million tons, the production is likely to prop up the world surplus, said the senior ISO economist.
On international frontage, March 2013, No 11 raw sugar contract at ICE was traded at 19.15 cents/lb while No 5 December white sugar contract at LIFFE was traded at $509.30/ton as on November 16th.
Wheat
The wholesale prices of sugar are riding the crest, remaining at Rs 3000-3050 per 100 kg, across the country, for the third consecutive week.
According to a market source, the ideal time for the sowing of wheat crop is between 20th October and 20th November, any hold-up beyond which would lead to a loss of 16 kg per day in the per acre yield of wheat. However, up till now, only 27 percent of the sowing target is accomplished which is a wake-up call for the country.
The foremost reason quoted by the sources behind this postponement is farmers' cost of production which is far beyond the minimum support price of Rs 1050 per maund set by the government. The prices of key inputs such as DAP fertilisers, diesel and electricity have increased many fold. However, there is no revision in the support price. Thus, there is an increased unease amongst farmers over whether to cultivate wheat or go for any other crop where they could fetch more profits.
Another factor contributing towards the deferral in the wheat sowing process is the non-availability of proper seeds to farmers, albeit authorities like PID are claiming to distribute 50,000 free seed bags of 50 kg each, to the farmers. However, according to market sources, 50,000 bags are very trivial support when compared with the total requirement of 16.8 million such bags.
The FAP is asserting over raising the support price to Rs 1400 per maund - at which price farmers would be able to cover their cost.
On the international front, world wheat production in 2012-13 is projected down 1.6 million tons to 651.4 million, which is 44.6 million tons lower, compared with the previous year. This is the largest year-to-year drop in world wheat production since 1992.
Coming towards the global prices, US hard red wheat for Gulf delivery settled on $368 per ton. While the EU France grade-1 wheat clocks in at $350 per ton, as on November 16th.
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