Cotton news coming through newspaper reports vindicate if things remain same until mid-October, spinners will probably not repeat the past mistake to import, relevant sources said adding that ginners are at their wits' end over relentless seed cotton arrivals.
The prices were vulnerable right from the very first day. However official rate ended at Rs 2075 or around.
WORLD SCENARIO: The record production - 20.9 million bales (480 lbs) appeared potential to keep selling in New York subdues but speculation and option and trade buying managed doings other way, except on the opening day, and the week-end upset whole week's and closed marginally mixed.
The Monday session moved along fundamental as futures finished at a one month low on speculative and option related sales. Traders observed that futures had marched higher on fears that Georgia's 2 million bales crop may suffer from yield and quality short comings due to the storm. But that soon petered out on forecast that country is going to produce 20.9 million bales.
The outlook change widely futures rallied next day banking on trade and fund buying to finish higher as the market rebounded from a fall.
However, the NY Board of trade said weekly spec/hedge report showed the find with a net short position of 26.4 percent.
The cotton futures extended rally on trade and merchant buying with the market possibly changing technical obstacles in the days ahead.
Most market participants have been bearish on cotton as they pointed out to a record crop in the US and large crops in China and India traders said the US net upland cotton sales were seen reaching between 50000 and 100,000 RBs (500 lbs). The shipment of previously booked orders were seen ranging from 50,000 or 100,000 RBs against last week's 60,700 RBs.
LOCAL TRADING: The maiden lint price fixed by the govt was announced on Thursday at Rs 2314 per 40 kgs. The KCA rates are indicated at 37.32 kgs. How players will react will be out any time.
However, subdued condition were noted throughout the week. The week opened with lint price down Rs 25 to Rs 2200.
The deals were given numbering three ranging is prices between Rs 2100 and Rs 2200. Arrivals noted on the day at 1.718 million which nearly double of the last year at this time.
On Tuesday ginners indulged in panic selling were not able to tackle properly the on rush of seed cotton from growers.
The ginners once again awaited intervention by the TCP. Good deals were finalised from Mirpurkhas, Shahdadpur and Tando Adam at rates between Rs 2000 and Rs 2125. The spot rate was downed by Rs 75 to Rs 2125.
On Wednesday official cotton rate grade III was again battered and reduced by another Rs 75 to Rs 2050. Green Signal from TCP ginners emboldened and held up stocks to see whether a rate of fixed by govt proves to be supportive.
On Thursday steady condition were observed as TCP intervention appeared final and soon.
The seed cotton price is above Rs 925 official support price. Only one deal of 300 bales were sold by Sultanabad.
On the last but one session the govt move to fix lint prices on the basis of the level enjoyed by the seed cotton had apparently soothing effect ginners took a sigh of relief for TCP active entry to salvage. The spot rate was seen at Rs 20.75.
Saturday's: The TCP move did not oblige the growers and ginners fully as they see this would not help in recovering their previous losses. The spot rates grade III extended their overnight bulls after picking up 15 paisa at Rs 2,090.
WEEKLY PRICE FIX: The ginners/spinners manner of deals will not be altered with the govt decision to fix lint buying price, only. How much price TCP will dispose of has not been indicated.
The decision has been too vague to lay hands on right place. The TCP is bothered only for lint that could be acceptable to importers abroad. As this would strictly be lint free of dirt.
This is besides the question whether an ideal contamination cotton is available. The leading cotton ginners look blank when added to affirm any such thing like contamination free lint is available in Pakistan.
They simply laughed away suggestion at certain places in Punjab and Sindh clean cotton is produced. Thus ginners would continue to tackle spinners as they lift only when according to calculation quality and price come in line.
The govt has fixed seed cotton price at Rs 925 (but is being sold at Rs 965 per 40 kg). Govt wants to implement the decision because spinners may not be prepared to pay a price sought by the ginners.
As market is higher and seed cotton is being sold at Rs 965, despite excessive supplies have been reported.
The govt is quite confident fixation of lint price on the basis of seed cotton ruling price will ensure stability in the prices.
In Pakistan initially cotton production is expected around 11 million bales, America is expecting (2004-05) crop at more or less 20 million bales and China and India are also showing muscles.
However, govt exercise at this juncture to keep but prices stabilised seems of little importance. It may turn important if the situation turns upside down. Any crop depending on natural factors like rains, heat and pest attacks can turn the situation, no doubt.
However, the main reason why govt wants this is not stable cotton price but how best to save the TCP from ending up in loss!
RESEARCH WORK: Sufficient space in newspapers and media has been wasted during the post-independence era. The word research has been as widely used as pledge to alleviate ruling poverty by supposedly elected people. If the same attitude is tried to find out cotton is one cash crop delivering highest export earning.
As a ritual ever finance and commerce ministers or agriculture minister would make it a point to urge cotton producers and ginners to take pity on naturally sufficiently neat cotton to put in effort to produce contamination free cotton.
Unfortunately this trait of element through years has been exploited by people to pay five to 10 cents less on pretext of being dirtful.
The bid of some to produce dirt-free cotton was foiled by refusing to pay additional cost.
All relevant people knew country can't afford to lose $1 billion and more and need was necessary to produce dirt free lint, but Dr Mahbubul Haq was a bit more serious. But he could not be able to move the corner.
More recently Usman Dawood and now importance is attached to shed the past lethargy or some hidden hand. But the day Sindh ginners laughed away the suggestion that country is producing contamination free lint. Now that textile ministry has been in existence it can press other ministries to combined efforts to save country $1 billion yearly.
They alleged that whatever investment the textile sector has made to bring up family members, kiths and kins nicely. Increased powers are with the Pakistan Cotton Crop Committee, nation hopes all should strive to see beyond the four walls to contribute the exchequer in addition to near and loved ones!
TAIL PIECE: Initial exposition to cotton price fixation was that of relief. However, a few more day's trading needs to know the reaction in its true colour.