As the buyers wanted for the PCGA seed-cotton latest arrival figure to hear good news about inflow news, ginners knowing things effected cut in the cotton prices manifesting things to take shape. The spinners not out in the market to pounce on the favourably acceptable cotton price, ginners cut spot rate by Rs 50 to Rs 1825 per maund up to Friday.
WORLD SCENARIO: Futures modestly ended higher in New York patchy trading looking for news to generate movement, but week fundamental and export sales offered caution. Futures closed- The opening session after long vacation ended up on modest speculative buying, with follow through interest seen buoying values in the coming days.
Traders noted that the market has drifted back to recapture last week's losses. The market may have also derived some support from the US weekly export sales which hit 258000 RBs (500 Lbs each) versus last week's 265,700 RBs.
Shipments of previously booked orders stood at 149,100 RBs versus 126,900 RBs. On Tuesday futures scaled up to near peaks on speculative and commercial buying with most of the trade looked for a continued foray on to higher ground. A trader commented that the technical signals may indicate a move higher in the market even though fundamental factors like record crops in the country and China etc.
Next day futures tumbled on grower and trade sales to finish down with the trade waiting for the govt report to provide direction. The market opened near unchanged and immediately stalled as grower followed by trade selling hammered fibre contracts. But futures quickly found support from both the trade and technical players, specially when key March approached on area support in the contract near 43.10 cents, traders said.
On Thursday another dip was seen on light speculative sales in lethargic business with market seen drifting in a band amid a lack of news for fibre. Traders waiting for the US export sales found report supportive as sales reached a total of 237,500 RBs from 258000 RBs in last week's report.
The Friday session trade the Thursday path as futures ended sharply lower on speculative fund sales and the marked was seen dropping more next week on back of follow through pressure in fibre contracts.
Analysts said speculative sales will remain, specially with bearish fundamentals in cotton stemming from a record US harvest and large crops in China and elsewhere.
However, a cotton market analyst said in 2004-05 session will again be dependent on China, world's largest producer and consumer. Futures March opened at 43.97 and December at 48.50 while March closed at 43.62 and December at 47.40 cents a pound.
LOCAL TRADING: The spinners and textile millers finding cotton price not as biting were not shy to visit and lift cotton. All these have in view aftermath of January 2005 when competitive textile products will be welcomed without any quantitative checks.
The PSF prices have become subject to rise and fall of oil prices which have been hitting economics of the world.
However, spot rates was reduced by Rs 50 to Rs 1825 until Friday. The PCGA statement on seed-cotton arrival was awaited. Supply was on increase as value was going down for the good of the bulk consumers. Phutti prices were ruling around Rs 775/850 in Punjab and Rs 700/820 in Sindh per 40 kg against government procurement price amounting to Rs 925.
The opening day, however, was firm both in ready and official. The spot rate was unchanged at Rs 1875. Around 12000 bales were sold at price range Rs 1775/1850/75 in Punjab and Rs 1675 and Rs 1850 in Punjab.
On Tuesday phutti continued to offer lower than procurement price at Rs 700/800 in Sindh and Rs 775/850 in Punjab. Cotton was humble despite sellers reservation prices were in spinners favour. Spot rate as a result had to be pulled down by Rs 25 to Rs 1850.
Good quantity of cotton changed hands. Buyers lifted 8000 plus bales and they were not tired. Opportunity was opening in a month's time and quota was supposed to be phased out. Spinners and textile millers have tightened their belts and have made huge investments to penetrate into markets in the West, East, South and North.
On Wednesday wait had started for the PCGA latest arrival and it was likely that flow will be faster and prices would fall much to the liking of spinners and the textile millers. Spot rate was quoted down at Rs 1825 and 9000 plus bales were sold. On Friday spinners almost sidelined hoping that some more relief was in offing.
The consumers world over was in wait for such products which were primarily cheap and qualitatively acceptable. Spot rate was unchanged on Saturday's spot rate was changed amid -- business following PCGA report. The PCGA rate showed higher than expected arrival figure.
BACK TO SQUARE ONE: A correspondent from Multan has highlighted the deep rooted problem caused by manipulations in seed cotton prices. He says: the growers have been complaining that the real beneficiary of the TCP induction were the ginners, because they are not passing on the fruit of price differential between procurement price of the TCP and the prices ruling in the market.
The authorities, the knowledgeable sources said, order an assignment to their organisation in this case TCP and turn blind eyes to see whether their own order was going the way that was intended.
Indeed the induction of TCP for purchasing cotton from ginners was aimed at ensuring the growers they got Rs 925 fixed by the government. But reports have been constantly pointing out that growers were getting seed cotton price much below the fixed price.
At one stage authorities asked the TCP to lift cotton only on condition that growers were getting the right prices. The TCP has been made to play or other players in the name of growers to give growers one more buyers so that cotton prices are not made subject to victimisation by textile millers and strictly for exports. But past is witness tenders were called from foreign buyers but ultimately it drove into the godowns of the spinners and textile millers.
The sources felt authorities cannot force its own policy and orders to be carried out, should leave the cotton growers, ginners and textile millers alone to allow fittest to survive. Thus some tax money collected from few lakhs in a population of nearly 12 crore to save from going perhaps waste, they suggested.
TEXTILE CITY: A textile city report can very well be taken a ray of hope that the project is inching ahead, though it still has a long distance to cover before January 1, 2005.
The textile city 11 member Board of Directors, constituted earlier, in a meeting the other day, probably elected a chairman, besides finalising also appointment of full time chief executive and a secretary of the company.
The project will draw an investment of Rs 12.5 billion in the first phase, when 10 units will be set up, each with 400 tonnes per day production capacity.
Around 80,000 jobs are expected to be created with around $2 billion export earning. Government envisages at least two more textile cities at an early date besides many more in future.
The noticeable fact and heartening indeed was the presence of secretary of the textile ministry, Tehseen Iqbal there. He was physically present in the meeting to probably acquaint himself about textile city project and how was that being carried forward.
Along with this was the news that textile ministry was being given an independent existence after separation from commerce ministry. God bless the decades old cherished desire for a separate textile ministry starts operation in full swing.
It can now be safety assumed that very cotton season problems related bumper cotton crop, short crop, diseases, spurious drugs will be solve. Unlike problems today they will not be left on the mercy of time to heal. But be it textile city or other major problems such as installations of textile ministry all do not augur well.
The announced meeting scheduled on November 29, perhaps turned ill-fated due to old reservation. The announced textile ministry was being hushed-hushed so that vital links like an elected chairman was going to be given effect besides finalising appointment of full time chief executive and a secretary of the company.
Some people in high ups are not happy of the set holding it under the shadow for the list few decades. India and Bangladesh had set up textile ministry some years back and world is a witness both have achieved enormous progress while Pakistan is languishing with meagre $8 billion exchange earning annually, sources recounted, pointing to earlier reports of bickering despite the minister and Board of Directors.
TAIL PIECE: Uncleaned cotton major problem for spinning industry. This is the minimum a keen foreign importer anywhere on earth expects. Contaminated cotton or for that matter seed cotton is long lingering problem that all major players like to welcome.
But according cotton sources no player want to add a penny. Some Sindh ginners do claim they arranged lint cleaner which is now rusting in the mill area. They said contamination cotton supply is often heard being discussed. Very lately a commerce minister Dawood had provoked growers and ginners to adopt supply of clean cotton their culture.
But they claim spinners do not want to encourage a clean cotton because ginners additional cost is refused by buyers. Allegation and counter-allegation cannot be stopped but fact is that every player needs to understand the problem of each other and if sacrifice is the demand of the situation it must come forth, sources said.