COTTON: Prices in the cotton market have been fluctuating this week as buyers and sellers both are struggling to get their upper hand. Ginners have been persistent in their refusal to sell at lower prices; whereas sources report that the market still has buyers that are purchasing undeterred from the high prices to fulfil short-term demand.
Consequently, the Spot Rate climbed up by Rs 50 on Thursday, reaching Rs 5,850, with a large number of mills abstaining from purchasing at the current prices. Phutti prices in Sindh reportedly ranged between Rs 2,400 and Rs 2,700 per 40 kg during the week whereas in Punjab they fluctuated between Rs 2,500 and Rs 2,800 per 40 kg. Lint, on the other hand has been going for Rs 5,500 and Rs 6,000 per maund in Sindh, while in Punjab the finer quality has been selling between Rs 5,800 and Rs 6,000 per maund.
Reflected in the share prices of textile units - which have been climbing up at the local bourses consistently these past few months - millers have been experiencing a turnaround of events with most units reporting increasing sales and margins. PBS marks a 10 percent year-on-year increase in export figures for the month of October with value-added textiles including ready-made garments and home textiles making up a larger than average contribution this time around.
However, yarn dispatches have slowed down slightly this past month, with cooling demand from China slashing exports by 16 month-on-month. But sources report that spinners are continuing to receive steady export enquiries; additionally, with many of the spinning units working to the fullest capacity, expansion is on the cards for a number of larger mills.
On the international front, the disappointing US export sales' data brought cotton futures off a one-month high, with prices softening after climbing up a few days before amidst hopes of the US Congress striking a deal to avoid the 'fiscal cliff' come at the end of CY12. Reuter's reports a one percent increase in the price of the March delivery contract on the International Cotton Exchange which settled at 73.35 cents/lb on Thursday after having climbed up as high as 73.98 cents.
Rice
Prices for the Pakistani rice have remained stable this week as demand from Chinese and West African quarters remains steady. Prices for the Super Kernel Basmati variety have gone up an astronomical $125 per ton as of the start of season on account of little availability.
Demand from China remained strong from mid-October after the crop became available in the market; hence, November's exports sit at a comfortable 19,062 tons of Basmati and 236,701 tons of non-basmati rice according to a leading international rice brokerage firm. Moreover, as November also marks the end of the harvesting activities, definitive production figures for the season are also beginning to pour in, marking out a generally positive season for local growers.
FAO's Rice Market Monitor predicts a 2 percent increase in production this season, with final estimates hovering around 9.4 million tons on a milled basis. The report also estimates that some 400,000 tons of paddies had been destroyed due to the seasonal Monsoon flooding this year, mostly in Sindh and Punjab, slashing down the prospects of what was meant to be a bumper season.
Consequently, the report marks down export prospects of Pakistani rice, estimating dispatches of some three million tons this season. Pakistani Basmati rice is set to perform poorly this season as well, as tighter competition from Indian varieties is pushing farmers towards cultivation of hybrid varieties rather than fragrant varieties.
Sugar
Yet for the 4th successive week in the string, the wholesale prices of sugar moved south, hinging around Rs 48-51 per kg across the country.
The headcount of operational sugar mills increased to around 36 this week, including 20 in Punjab, 14 in Sindh and 2 in KPK. Amid spur in the crushing operations every week, with the carry-over sugar stock already built up, the plunge in the prices of sugar is not a bolt from the blue.
Although, to shed the surplus sugar, the government permitted the export of 400,000 tons of sugar this week, yet the country could barely export around 135,000 tons from the previous export target, regardless of the fact that Pakistani sugar is of superior quality and is available at cheaper rates. This is an eye-opener for the government and calls for more vigilance in agricultural and export policies.
Pakistani millers desperate to export are unable to meet their targets because of unattractive export deals they are coming across. Here comes the role of Pakistan's commercial attaches. To date, over 67 commercial attaches from Pakistan are working in different countries to promote the trade relationships. However, keeping in view the dwindling share of Pakistan's exports in the world market, the question mark hangs on whether these trade experts are performing their duties properly or not.
While, the Pakistani government is granting favours to India at the expense of marring its local industry by deciding to dismantle the negative import regime, conversely, India is squeezing the noose on Pakistan by imposing a 20 percent import duty on refined sugar to sustain its local industry.
According to a market source, commercial attaches must be assigned targets to bring home better and competitive export targets for Pakistani sugar, particularly from India, Iran, Afghanistan and Russia. This would serve as a lifeline to spur Pakistani sugar exports, said an agriculturist.
On international frontage, the International Sugar Organisation lifted its forecast for the 2012/13 global sugar surplus to 6.2 million tons.
Glancing at the prices, March 2013, No 11 raw sugar contract at ICE was traded at 19.34 cents/lb while No 5 December white sugar contract at LIFFE settled at $513.30/ton as on November 30th.
Wheat
"A stitch in time saves nine". Looking at the precarious situation of wheat sowing in the country, it seems like our government is ignorant of this notion.
The government paid no heed to constant FAP warnings to discontinue wheat cultivation because of unfair procurement prices set by the government, amid rising cost of agriculture.
Moreover, the authorities have also been sleeping through the continuous demands of Pakistan Agri-forum to raise the procurement prices to a reasonable level before the termination of the ideal sowing time. Consequently, the farmers kept waiting for a favourable decision to come and only 27 percent of the land could be cultivated within the perfect time.
Now that the perfect sowing time has already been slipped and the country has lost its target to yield of 26 million tons of wheat, the government has finally walked up to the matter by increasing the minimum procurement price to Rs 1200/maund, up from the previous price of Rs 1,050/maund. According to a market source, the government's lethargy to reach a rational and timely decision has deprived the country of 1.5 million tons of wheat amounting Rs 45 billion.
With wheat prices peaking at Rs 3,000-3,050 per 100 kg, the current backdrop raises concerns over the demand-supply situation in the coming season with a heightened probability of country importing wheat by the end of next year.
Moreover, the market sources also highlight that the flour available today at around Rs 40/kg will surge up to Rs 45/kg by next year, which will be another shock for the poor Pakistani masses already grappling against high food inflation in the country.
On the international front, US hard red wheat for Gulf delivery settled on $380 per ton, 4 percent up from the price last week. While the EU France grade-1 wheat clocks in at $358 per ton, as on November 30th.
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