Cotton trading tended subdued for several reasons, primarily it was difficult to shed the jovial mood created by Eid holidays, absence of private sector exporters and perception that prices would range in higher band due to Eid holiday level at Rs 2350.
Another holiday Iqbal Day also saw most businesses and institutions closed leaving imprint of a subdued going. However, on Friday spot rate was to Rs 2385.
INTERNATIONAL SCENE: The Eid holidays and Iqbal Day in Pakistan, New York daily cotton trading details were not at hand. However, whatever sketchy reports were available futures tended lower. The reports were available when papers in Pakistan were published. The initial session showed that December contract ended modestly down at 51.26 while March contract closed 0.06 cent up to close 54.29 cents a pound.
The cotton scenario in US is what the world watches keenly to plan its needs. The all recent events that were pronounced so horrendous that the world cotton and textile sectors had almost stopped breathing.
The first Katrina hurricane followed by Rita and then third all poised to hit cotton producing areas. For quite sometime best of surveys and analysts could only say in whispers textile world prepare for the worst. But suddenly it has surfaced that all three storms hit the areas but passed off after giving cotton both a loving kiss.
Analysts the other day commenting on the hurricane attacks said that it left behind huge death toll of human beings and destruction of houses and buildings, oil installation very mercilessly mould but surprisingly the massive storms side-stepped the US cotton crop, leaving plants intact. A Reuters Survey of industry analysts produced an average forecast for US cotton at 23.25 million (480 lb) bales up from USDA estimate of 22.27 million in October and matching the record 23.25 million set in 2004-05. Meanwhile major players await USDA supply/demand report. Friday's NYCE session saw December go down to 50.20 and March to 55.50 cents a pound.
LOCAL TRADING: Patchy trading was marked in the aftermath of long Eid holidays and only a day after markets pulled shutters down on Iqbal Day. However, spinners and textile millers lifted lint per their after Eid needs. Exporters were surprisingly still on the sideline watching prices on the rise. The TCP called a fresh tender assuring that it will hold prices from going berserk. The official spot rate stayed put on pre-Eid level at Rs 2350.
The asking prices in ready also hovered around the spot rate. On the reopening day the market operations had no job except to exchange greetings. The spot rate was held hostage at Rs 2350 while asking prices in ready ranged in Sindh between Rs 2250/2350 and in Punjab at Rs 2375/2400. Phutti in Sindh was quoted at Rs 1025/1075 and in Punjab at Rs 1100/1125. Physical business was absent on the day.
Seconday's trading was above modest as buying activity was seen as mills were expected to work full swing. However spinners and textile millers were after quality cotton despite higher ruling prices helping to go rates further. Market was expecting exporters to jump into buying as prices were likely to go higher and higher as supplies were clearly short. However, the TCP injected new life by floating a tender for sales of 50,000 bales of cotton. The buying was said to be positive as reports from cotton producing countries except India and USA said that demand was to excel production.
On Wednesday cotton market shutters remained down as it was Iqbal Day. On Thursday modest trading sustained in cotton as mills did not relent and continued buying. The market was abuzz with short phutti arrivals prompting spinners and textile millers to go ahead buying just in case. While official spot rate was put at Rs 2350. The cotton price in Sindh ranged between 2225/2400 and in Punjab ruled between Rs 2400/2425. Meanwhile TCP received bids from exporters around 44 cents a pound.
On Friday firmer trend sustained as wary spinners and textile millers picked up all lots on offer, despite higher asking prices. Offered spot rate rose by Rs 35 to Rs 2385 while Sindh cotton was sold between Rs 2250/2450 and Punjab changed hands between Rs 2425/2450.
On Saturday, spinners did not show any reluctance in making fresh deals on short crop news, dealers said. Following deals were reported: some 1000 bales of cotton from Nawabshah at Rs 2400, 200 bales from Shahdadpur at Rs 2350, 400 bales from Tandoadam at Rs 2325, same figure from Dadu at Rs 2425, 200 bales from Buchri at Rs 2400, 2000 bales from Khanpur at Rs 2400-2425, 1000 bales from Upper Sindh at Rs 2450, 1000 bales from Rajanpur at Rs 2425-2450, 1000 bales from Deragazi Khan at Rs 2425-2450, 400 bales from Rahimyar Khan at the same amount, 1000 bales from Khanpur at Rs 2450, same number from Bahawalpur at Rs 2425-2450 and same figure from Multan at Rs 2450.
PARTIAL ACCORD: China and the US must have felt quite a degree of relief over three years clothing and textile accord which the world will see as reining in of China's aggressive exports while hailing deal pending for five months which took seven sessions. The two sides were too much formal as both expressed satisfaction in signing the accord, though China warned in the same breath that free trade in textile was inevitable. China has been all along objecting to world free linked to WTO system.
Despite so much haggling during almost half a dozen formal meetings and several on the sidelines of equally important and relevant meetings the accord had actually push of President Bush's China meeting in a few days time and WTO ministerial meeting fixed for 13-18 December 2005. The EU which had similar problem of excessive textile exports reached a decision quicker, relieving China burdened with around 90 million mouths to feed. China's emergence as an economic Super Power is being watched advancing to collision course with the existing super/powers.
The deal restricts growth in 14 core categories such as trousers, shirts, knits, under wears and bras to 5.5 percent, 2006, 7.8 percent in 2007, and 10.3 pc in 2008, compared to 7.5 pc annually under safeguard mechanism. In other 20 categories including socks, sweater swimmer, wool suits, cotton towels and blinds would average about 10-12 pc in 2006, 12-15 pc in 2007 and 15-16pc in 2008.
A bit improved opportunity is welcome but "protectionism" or you name still remained a slur on free global trade. Billions of dollars gains are being tossed in the air that will accrue if third world countries open their markets probably at the equal amount of risk of the big economic powers? Knowledgeable circles hint at finding out who loses and how much and who gains and how much. But who will strain his calculator is the question!
FRANCE'S THREAT: Who are repeatedly being reminded that a failure could cost the world economy hundreds of billions of dollars in lost opportunities. If the warning is to the countries who have the power to make or mar, well and good. Poor is always made to watch spectacle from the sideline. Those who have taken so long, nearly 50 years could have opened their "benevolence fund" instead of doling out merely rosy promises.
Even if the day starts from failure of Doha Round in 2001, who were held responsible - the poor. Certainly not. Either third world should not have been shown the go path to riches and allowed to live on with one square meal a day or such plans were offered which could ease proverbial two square meals with enough to have health, education and employment provision if not the sky scrappers or things rich are fearing to lose under WTO system. It sounds good, Mendelson says EU offers of average farm tariffs cut of nearly 40pc was enough to switch the spotlight from agriculture to other areas of negotiations such as industrial goods and services.
So far EU offer was considered by it that an average was 54 pc to 90pc which was ardently opposed by the US which sill had 40 percent subsidy for its farmers in hand. The third world leaders from Brazil and India have not come out in welcome what Mendelson says should bring smiles on the faces of poor bread earners. However Brazil has in whispers said what the EU has put on the table would excluded most of the products they are really interested in such as beef, poultry and sugar from deep tariff cuts.
India has accused that though US has made concessions on farm subsidies can still dump products on world markets. Not only third world but France, where mayhem extended for about a fortnight, and night curfew has been imposed in a Paris suburbs, has warned that it might exercise its veto right over EU acceptance of a world trade deal. All these on, meetings continued to be held to save mid-December Hong Kong WTO ministerial conference in London and Geneva. The outcome apart, all sides have warned the WTO that negotiations could go Doha Round way "unless differences could be narrowed fast."
DOHA ROUND WAY: So bottom line comes to this: All are trying to see Doha Round through in Hong Kong on December 13 to 18, but none is sure to give the extent to spare December HK WTO meeting from getting doomed. The US with 40pc still in hand for their farmer has courage to blame EE's farm tariffs still high to be acceptable. Within EU France, which has seemingly biggest stake and problem at home, still waving the magic wand against all other agreed partners. Why US feels under obligations to keep 40 pc subsidy - for leverage and why France is against US call to give up tariff averagely around 54pc.
These are only the agri subject, manufacturing and services subjects like telecom and tourism and like odds are yet to surface. Will the load be bearable to carry on until a reasonable solution is up. The IMF and World Bank, are pessimistic, the poor countries are quietly watching the spectale and HK officials are beyond doubt optimistic the meeting will cover all the Doha Round agenda to end with thumping success.
The details of the meeting could not be available due to Eid holidays could have cleared the haze. In the meantime two richer countries have not been themselves clear or they are in league keeping the world at bay. British Prime Minister Tony Blair is clear on the subsidy issue as he says it should go. As a matter of fact services and goods are minor which is either hidden or do not really bother. Beyond these appear aids to poor countries are also in view the rich countries want to take advantage.
Of late it is becoming clearer that plans are to absolve chosen Least Developed Countries (LDCs) of all the pending are gaining momentum but the rich will remain master of the technological advancement and reap the harvest, while poor will remain starving from their weaknesses will silently own the same. They will be poor as ever whether WTO or no WTO. The EU reluctance is understandable as it cuts the tariff demanded by the US will be objected by Japan, S. Korea and Switzerland. Seeking satisfaction of all without hurting all is not possible. The long 40 years of hassle is a witness!
TAIL PIECE: If value added sector give their Thursday's November 10, meeting a shape, the leaders rightly said (and they have always been reminding the authorities) Pakistan will end-up a supplier of yarn and fabrics. Hardened up with rising cost of value addition and lack of market access facility in countries like EU, they have taken a decision to relocate their industries in Bangladesh, declared as LDC and prospect of market access of facility.
The readiness to relocate value added industries to BD comes weeks after BD team's visit to Pakistan and its open invitation to take advantage of joint venture.
The disappointed value-added sector leaders have placed such grievance as high cost of electricity, gas and water. Besides utilities high cost they complained rising cost of production resulting from costly export refinancing and higher market rates etc the authorities tackling the massive quake devastation, will save foreign exchange earners from leaving country. They have always been saying cotton yarn and fabrics export won't push export earning beyond $8 billion.