Trading in cotton remained sluggish as China did not enter world markets with a big shopping list as was expected infusing perception in buyers to wait for drop in prices, during the week ended on March 13, 2004.
The ginneries holding spot rate firm for sometime slashed it by Rs 50 to Rs 3000 hoping buyers entry into the market but things did not more in desired direction.
WORLD SCENARIO: Cotton futures fluctuated both ways in New York but the week closed with a substantial loss, China still being awaited to enter market with rather a bang.
The first day's trading saw future down near a 3-week low on speculative sales and lack of buying, with the market possibly grinding lower in the days ahead. It is more a lack of buying than anything else, traders observed.
Brokers said small speculators dumped cotton and touched off automatic sell orders when fibre contract slipped below initial support at 68.50 and then 67.90 cents.
Traders waited for the USDA supply/demand release. They said they would be waiting also for planting intentions report containing a forecast for US cotton sowing.
On Tuesday went down to 11-week low on heavy speculative and options-related sales, Most commercial traders were confused and frustrated that demand has not picked and it looks like mills have moved to hand-to-mouth buying only until the market stabilised.
The third day trading was different in the sense that futures finished higher on trade buying. Meanwhile, USDA pegged US exports in 2003-04 marketing year to a record 13.8 million (480 lbs) bales versus 13.2 million last month.
The Chinese imports were jacked up against apprehension, to 8.5 million bales from 7.0 million and consumption was pegged at 31.50 million versus 30.5 million bales. US ending stocks were also chopped down to 3.5 million from 4.25 million and world ending stocks were sliced to 31.75 million against 32.49 million.
Traders still water to see USDA export sales report. Thursday's session saw futures surge on combined trade and speculative buying, expecting prices are likely to push up.
The market took note of USDA weekly export, sales report, showing sales at 106,700 RBs, 500 LBs each. US shipments stock at 316,400 RBs against trade belief in the 300,00 to 350,000 RBs range.
LOCAL TRADING: Goings on the cotton market have turned illusion as reasons best known to the players receiving fresh deals report each day is hard, relevant sources who supply detail, expressed inability to go by normal practice observed for years.
However, trading slowed down owing to world rate signalling sharp set backs due to China still planning to enter. Now as the USDA reported China's imports and consumption both remains on the higher side, pressure on local sellers continued who slashed spot rate by Rs 50 to Rs 3000 to watch how buyer behave.
It was for the next week that watch had to be put off. On the first days trading no trading was reported as spinners wanted to maintained pressure on the sellers at the back of softer going in New York.
The second day was no better which sources said was cheerless in response to world rate yarn prices were keeping low to discourage spinners entry. Spot rate was adamantly unchanged at Rs 3050.
In New York cotton futures were stated to have nose dived. On the Thursday spot rate was stripped of Rs 50 in one stretch in line with world rate. The "Kapra" and yarn markets were stated to have been remained closed sort of protest. Signal from NY was bullish but local market stayed adamantly put. Ginners hoped and planned to upgrade to spot rate but for the last days.
Naturally in respect of signal from NY local prices firmed and Punjab cotton was put on offers.
The deals were as usual taken from DMR which were state. Late in the evening three deals were however acquired prices therein ranged between Rs2850 and Rs3025.
The ginners pinned hopes in Saturday to see improved sales and prices.
SATURDAY'S: Session had already lost shine because of Pak-India cricket match in Karachi.
The official spot rate was unchanged hoping Monday next will show change in scenario and return of spinners with vengeance.
The prices are keeping pretty low to suit export parity. No trading was possible in such heat created by cricket match between India-Pakistan after 14 years.
LAXITY SLATED: According a report the agriculture authorities remained evasive at a time when they should have come forward and actively tackled the situation and helped the growers.
The report said that policy to take cotton production to beyond 11 million bales failed. Both the ginners and growers have alleged that authorities did not bother when what they said pesticide suppliers were "minting money". The quality too they claimed was low.
They pointed out that when boll formation begins, the time should be taken as crucial. The agriculture authorities in defence have been claiming that they had warned growers unless prompt action to stop the attack. But was that enough or some practical steps to stop sales of substandard were required, the growers asked.
In the process some relevant people in Karachi stress the need of a textile industry which they think can tackle problem effectively and promptly. The victims alleged that they were not sure how effective will a misnotry but said trying for the same is over due.
Under the circumstances the ginner, growers accuse that louder voice is heard in Islamabad. They said the voice may have come down in volume but cotton production and trade remained at the mercy of some, they emphasised on the condition of anonymity.
They said if this govt will not settle the basis issues of the growers and ginners and attend to their needs such as water in time, power availability and inputs of quality and right taking production of cotton to 15 million bales and above will remain a nightmare.
They said cotton policy for the 2004-05 is due shortly. It would do good if it incorporates not only suggestions but point out responsibility of the agri authorities and the field workers.
They said they have held back their decision several times but if their crop would be destroyed when it could be saved, no need continuing serving somebody's interest.
GOOD NEWS, IS IT? The European Union in a bid to bring down temper down in Pakistan against such measures that would hit harder Pakistan. The bed-linen exporters have said after nearly 28 percent or like penalty on account of anti-dumping and withdrawing 15 percent GSP they will; better close down.
However, showing some concern to the prevailing anger in Pakistan, the EU is planning to raise third world quota from May one, 2004. The exporters of bed-linen and textile products have not quite welcomed the report.
As long as the EU sheds the measures hurting singularly to exporters in Pakistan, the moves are less likely to relax Pakistani exporters.
The exporters in Pakistan primarily worried on the penalties that will last after 5 years meaning they will be deprived of around 40 million dollar annually the coming five years.
They are worried also that 10 countries joining the EU on May 1, 2004, will possibly follow the EU line against Pakistan. The EU, rightly say Pakistan is good trading partners, if is on this ground anti-dumping duty against Pakistan and taking away 15 pc GSP sound strange.
The exporters have decided to stop importing raw materials like chemicals and dyes and textile machinery from EU. It is not clear whether exporters have dropped the idea. As the EU move to improve the textile quota for the 3rd world sounds will be justifiable.
TAIL PIECE: Interesting charge has been framed by custom against textile exporters, but the shield used by the exporters was still more interesting.
The custom suspected that some exporters had committed over-invoicing. Notices were issued to exporters. But the reply given by the alleged wrong does was that importers sometimes show less-price to save customs duty.
Meanwhile, textile body has sought withdrawal of the notices as exporters were the national heroes for crossing export barrier of ten billion dollars.