Cotton prices tumbled a number of times on the cotton market bringing ginners under pressure while spinners took little interest due to Ramazan and the Eid, which is only a week away. The exporters interest waved apprehending exports will be difficult, relevant sources said during the week ended on November 6, 2004. The spot rate could not bear the weight of "gashing" phutti. It had opened at Rs 2000 and closed on Friday at Rs 1925.
INTERNATIONAL SCENARIO: China factor nearly missing, watch on tight US election and USDA export sale report kept trading in NYCE cheerless though futures were lower.
On the first day of the week cotton futures closed weaker on combined speculative liquidation although steady trade buying at the lows trimmed the markets losses. Traders said some of the speculative selling may be tied to liquidation ahead of the presidential election.
Analysts said the cotton trade is watching the tight US elections battle to see if trade policy and the dollar will be affected by the poll results. However, fundamentally the market must also wrestle with the record cotton crop in the US and elsewhere.
On the second day futures did as about face to close higher as speculative buying wiped out early losses in the market and follow through purchases could buoy values in the coming days. Analysts were monitoring the US elections to gauge its effect on the cotton trade.
Further the trade was looking at figures from the USDA weekly export sales and its monthly support/demand report on November 12. On Wednesday futures dribble to an easier close on switch-related sales, as the trade looked for leads to give it direction in the coming sessions.
The fundamental outlook for cotton remains dogged by a record crop in the US and elsewhere. Traders said the market should be turning its attention to rollover with first notice day in December cotton contract on November 22.
On Thursday cotton futures reeled from speculative and options related sales to finish weaker with the poor technical outlook seen driving the market lower.
Meanwhile, the USDA weekly export sales report said total US net upland cotton sales reached 91,500 running bales (RBS 500 lb each) from 72,500 RB shipments of US cotton from previously booked orders hit 89,900 RBs versus 105,400 RBs.
Fundamentally a record crop in US is keeping pressure on prices. The last trading day on NYCE saw firmer day as players rolled positions out of spot December with the market looking forward to okay government report. Analysts said dealings were dominated by robust switchy activity, the most of the running done by trade accounts rolling their longs into the back months.
Now market will turn its focus on the monthly supply/demand report. Crop unofficially being put at 21.056 million bales.
The futures position could be gauged from following figures. December opened at 43.98 while it closed at 43.36 and March opened at 44.20 and closed at 43.73 cents a pound.
LOCAL TRADING: Fundamentally cotton remained in negative column primarily due to bumper harvest and secondly Eid with long holidays are advancing closer each day. The prices were adjusted downward more than once. The official spot rate commenced the week at Rs 2000 and ended on a negative note with Rs 100 loss at Rs 1900.
The seed cotton has continued lower than Rs 925, the government fixed price despite step that TCP would buy from ginners who would pay seed-cotton price in full - Rs 925.
In Sindh phutti was paid Rs 810/875 while in Punjab phutti fetched Rs 850/900 for 40 kgs. The spot rate was unchanged on Tuesday while in ready Sindh cotton was sold at Rs 1820 and Rs 1950 while in Punjab cotton was paid Rs 1975 to Rs 2025. Trading was lively.
The expected better pace of arrival did not nervous growers who maintained their selves. But the ginners used their good sense in slashing spot price by Rs 25 to Rs 1975. Buying support continued. Ginners acted wisely bringing in return good buying that ensured new arrivals without showing any consternation.
On Thursday spot rate was further slashed as seed cotton arrivals continued to increase. In ready also phutti prices fell by Rs 50 in Punjab and Sindh to Rs 775 and Rs 875 and Rs 850 to Rs 900 respectively.
Ginners were indulging in panic-selling, however, buyers were not in a hurry hoping situation may continue to favour them. The official rate was quoted down at Rs 1950.
FRIDAY'S: Official rate was pulled down by Rs 25 to Rs 1925, showing how hard pressed the ginners are today due to increased pace of arrivals. However, experts expressed that ginners are not as bewildered as they should have been in the absence of the TCP with mandate to buy unlimited quantity. Rates in ready in Sindh was Rs 1775 and Rs 1900 and in Punjab Rs 1900 to Rs 1950.
The more the exporters and TCP presence was felt, spinners visit and buying appeared certain in small or medium amount.
SATURDAY'S: Slackened proceedings were marked on the market owing to Eid holidays ahead and due spinners and millers have done regular shopping in the presence of cotton exporters and the TCP.
However, also shadowed the very fact that seed cotton arrivals have been alarmingly high prices are regularly falling. Spot was rate was at Rs 1900.
TCP TO DO IT: It is great that authorities have at last come to grip a problem and want to get cured. The TCP has been made mandatory to buy cotton it ginners by seed-cotton at government fixed procurement price - ie Rs 925. But how loud is the authorities voice to be heard by TCP and ginners will surface a few weeks hence.
So far reports have been clear and loud seed-cotton is paid Rs 925 per 40 kg which should be paid higher for the quality. Generally ginners are phutti around Rs 600 and Rs 700.
So should have been when on ginners insistence TCP was inducted to pay games a reasonable price, they should have been effectively asked to pay growers Rs 925. However they should take care of the announced policy to make sure that TCP ensure that growers get their due.
The financially weak growers are the worst who are valued little by the only buyers of their produce. Even space matter is so aggravated that seed cotton sellers submit to the will of the buyers.
After years of independent living and a dozen of rulers declaring a change in condition for better but claims have never taken a concrete shape. Growers are being sympathised to the core once again but week after TCP intervened, has been asked afresh to take care of the growers they get fixed price of Rs 925 per/40 kg.
The circles expressed surprise why should a player be reminded of the minimum price he/they have to pay. The yardstick of a smooth business and commerce going in the country has to be found out.
It will be tomorrow a trend-setter in cotton ginning as well as in other sector show production could be enhanced while products could be cost effective.
So quietly has SMEDA done to enhance the ginned cotton production by 30 percent and induce investment shy ginners to participate in a venture that will go to benefit them, observe circles close to cotton trade the other day.
They said this is a good beginning that could some day become the culture so much needed in Pakistan.
Initially five ginning units had been selected as pilot projects and have proved that they can be adopted by all the ginners who will gain. Each project cost Rs 300,000 partly will be supplemented by the SMEDA.
The machines and parts whatever could be called was developed at Smeda's Technical Service Group (TSG). The TSG chief Shahid announced that normal production rate with five machines was 10 bales per hour utilising same set of machines without increase in electrical load. He explained that locally developed saws with Smeda is half the cost of imported saws.
He pointed out normal rib size of ginning machine was 17mm which was brought down by Smeda's technicians to 14m to accommodate 115 locally developed saws in place of 100.
So much filth has accumulated since independence and who to clean sweep emerges no one. For no fault of Pakistan it is paid 5/10 cents lower than its value. If aggregated that amount comes to $one billion annually.
Since its is a loss of the country half hearted talks to cure this disease are heard but the solution is nowhere to be seen. So much done to produce contamination free cotton has not gone beyond major cotton and textile players accusing each other.
TAIL PIECE: An study very comprehensively covered in newspapers is a true story of apathy textile industry has been for the last 56 years, in this country. Those who prepared the study appeared had not only closely watched from an expert but had been utterly disappointed with the developments. No doubt why lately textile millers and others had been suggesting that textile and cotton was not likely to do much good to the country and therefore some other ways are found to yield good foreign exchange for the country instead of paltry in every sense $6.8 billion. But how difficult it is in every body's knowledge. Again the note at the end of the study quotas late Dr Mahbabul Haq that he had emphasised.
That the govt should concentrate on the IT an industry which is fastest growing in the world. But where is the money to come from? Knowledgeable circles asked, adding that Pakistan never lacked in ideas!