The much awaited PCGA statement that enables major players to determine their moves got upset instead. The ginners offered cotton to buyers at favourable prices perhaps forced by the fact cotton stock was getting piled up as has often been the case in the past.
The spot rate was stretched up instead was pulled down on Wednesday by Rs 10 to Rs 2,390 had another fall of Rs 15 on Thursday to Rs 2,375. There was no change in spot rate on Friday.
WORLD SCENARIO:
The futures on the NYCE moved in narrow band as trading failed to pick up for long holidays Xmas and New Year in a matter of day besides China's call was still vague. All concerned with the cotton trade knew circumstances were favourable as stakeholders were also hurt by the WTO ministerial conf in Hong Kong as negotiators presented second draft text calling far doing away with the cotton subsidised by 2013 while preparations for giving the decision a shape should start only April next year (2006).
Relevant traders and growers were getting ready to brace the injury as what they call step-2 would cease to exist after July 31, same year.
An increased stabilisers futures, struggling to go much beyond 55 plus cents a pound. However, relevant players were more disappointed that expecting a better going before the end of New Years Day in a weeks time.
Meanwhile, lack of buying support was gradually eroding values and a change was not coming any time soon. The only hope of regular demand coming is in view of the Christmas and New Year's.
Towards the close of the week USDA report the net upland cotton sales data in front of the Christmas and New Year holidays helped futures to go 2 months high. No doubt speculative fund buying also aided the sentiment. The market will close early on Friday at 1 pm In figure terms sales during 2005-06 was at 293,000 RBs (500 lbs) with China top buyer at 220,800 against last week's 429,500 RBs, shipments amounted to 283,000.
The sales figures only slightly impacted trading was speculative selling in a truncated session ahead of Xmas and New Year holidays humbled March which closed at 54.14 and May at 54.64 while they respectively March had opened at 53.39 and May 54.23 cent a pound.
LOCAL SCENARIO:
The cotton trading was in small quantities as spinners aware of cotton piling up at the ginneries lifted sporadically. The ginners were perturbed at the situation. Prices were in their vow ruling lower than they would have been received. The fortnightly statement is one scale spinners keep watch on it. If the figures are comparatively lower than last year the adopt one method of keeping pace with their inventory.
Ginners have their own perception of looking arrivals figures. However in the current case the figure upto December 15, 2005, showed arrivals higher. Buyers took a sigh of relief and were planning steps to lift cotton at reasonable rate. But buyers had hardly reached any point when they heard unkind message that there was something wrong in calculation.
The arrival in fact was lower than. This season since July/August twice arrivals had been shown slightly higher than shortfall. Generally such discrepancies are played when visible signs of floods damage caused by floods, pest attacks, heat etc.
This season only once during early period, excessive rain was held responsible for cotton damage in Punjab. And, according to relevant people, need was also felt for re-sowing. It is worth mentioning that re-sowing is not normal course and much less picking is reported.
Later on reports of such floods, pest attacks and damage had spoken as such but had advised agri authorities and the growers to get going for saving crop from damages likelihood of which was certain.
Later on speculation about bumper crop or large scale damage was not heard. The fortnightly statements noted shortfall except on two occasions when improvement was recorded by crop remained short.
Spinners and textile millers are in need of over 12 million bales as China has been restrained and Pakistan can adequately fill the gap. Widely confusing scenario has prompted buyers to go expeditiously as supplies have to be large due to Xmas and New Year's stepped up demand. The spot rate dropped on Thursday to stay at Rs 2,375. And there was no marked trading pace on Friday. Spot rate was unchanged.
On Saturday's the spot rate was unchanged at Rs 2,375. Following deals were reported; 2000 from Upper Sindh at Rs 2400-2425, 600 from Lodhran at Rs 2,410, 4,000 from Jahania at Rs 2,390, 400 from Multan at Rs 2,400, same figure from Bahawalnagar at Rs 2,350 and same number from Muridwala at Rs 2375.
BOOSTING TEXTILE TIES:
This is not the first time that Manchester (UK) based traders have shown interest in boosting ties in textile sector. The delegation now in Pakistan had offered the ties on nearly swap basis - it wants to sell chemical and dyes to Pakistan. May not be exactly in the same field and area but China, India, Turkey, Sri Lanka Bangladesh have had approached.
The response from Pakistani manufacturers and exporters have never been made clear.
May be Pakistanis lacks in some way and hence the hush hush sort situation persists. Only few months back Kyrgyzstan had invited Pakistan with others, quite a few countries engaged in textile business participated, as new report showed but Pakistan was not present in the function of international cadre.
The present team led by Manchester's Lord Mayor, first Pakistani, Muslim and even Asian, happily expressed that Manchester based businessmen want to promote relations with their Pakistani counterparts.
However stated in the same breath that apart from playing the role of bridge textile industrialists of Faisalabad could take benefit from the expertise of that city has been known for decades.
Meanwhile, accompanying the Lord Mayor, international trade advisor of Manchester Chamber Link Tony Brown graciously offered to buy textile products from Pakistan preferably bed-sheets. Tony Brown also seized the opportunity to offer to Pakistan dyeing material and chemicals which Pakistan has not been able to set up plants not only to cater to the needs of dyes and chemicals for the last five decades.
The team member appeared impressed with the incentives offered by Pakistani government to investors. The team members will study the prospect and will invest also. Unfortunately Pakistanis have not developed enough to proudly call nearly self-sufficient in all respects, such as textile manufacturing plants, dyes and chemicals manufacturing units. And, if parts of certain machine is built is not patronised. The manufactures of auto parts have strongly opposed bid to import second hand ones.
The authorities should look into the matter. If local parts are costlier, something should be done bring down prices so that local investors are not faced with risk.
LARGER PHUTTI ARRIVAL:
The earlier PCGA fortnightly statements were showing depleted arrivals, without any apparent reason for that. Rains, heat or pest attacks were being reported, but all reports indicated damage was located on the threshold. If they said farmers and agriculture field workers looked after the plants and took steps to fight any probable menace, cotton was likely to be kept safely away from damage.
The fortnightly statements would estimate around 500,000 bales lower than corresponding period last year's. The second PCGA statement in November estimated arrival better than previous ones.
That affected price, which dived down as is the practice. One of the later arrival figures was again down as compared to previous year's arrival. The current arrival upto December 15, 2005, is shown larger arrivals but 11.29 percent less than last year's.
According to market operators who closely watch such statements and independent reports estimated that arrival size at 10.0413 million bales, perhaps beyond doubt indicated that production will match the revised target of 12.5 million bales.
Unless, God forbid, some damage to cotton crop overtakes earlier target if memory helps, 15 million bales will be achieved. At the almost outset of the season and until September, the month supposed to be laden with damages, substantial harm used to be reported in Punjab caused by rains.
The cotton assessment committee could be helpful in finding exact loss or otherwise, position by putting in efforts to oversee crop and interviews with the growers. But it is generally experienced that government's assessment committee simply toes the line of reports based on different interests.
Authorities appear too much engaged in making lint free of contamination, which of course is very significant and should have been achieved long before, but moving along the expected health or otherwise of cotton is necessary to keep in view to be surge. It gives an idea how much to export cotton or import to feed the spinning and textile producing sector. The next 24 hours saw "amendment" in arrival figures though prices registered decline.
WORDS COME LATE:
The American words to open market for African cotton has come too late. The practical steps, likely to begin by April 2006, have to be seen. In the meantime, according to the USDA African cotton production has come down from a year ago. Too much bickering, meetings half hearted decisions on issues before the HK Sixth Ministerial Meeting 13-18 December, had squeezed out courage from harassed people for centuries.
The production in Africa has come down, should not have they decided to switch over to some other paying crop not coming under pernicious impact of subsidies. Every time such key conferences are held disappointed 3rd world participants express hope and such things. A couple of years back a meeting in Geneva when sort of final decision had to be taken, one year extension from 2004 to December 2005 was given.
It was so done to tell the poor world that WTO has not failed entirely. The Chinese envoy to WTO to abstain from saying wheat was his inner feelings of the world used polished word that agreement holds out hope for a final pact. The Brazilian foreign minister who is top leader among G-20 and has been voicing for the poor expressed in similar fashion like Chinese ambassador that "they had advanced by dozens of kilometers compared to Cancun.
One important comment was that moot ended with only promises and no frame work. A research fellow at the S African Institute for international affairs wondered there was lots of similar language but was never acted upon.
However, if April 2006 afterwards show the preparation of every minor and major issues that will set the pitches here and there right and a life that poor of the world has dreamt of May God give powerful and resourceful to go beyond efforts to just get raw materials and labour cheaper.
TAIL PIECE:
Some interested close to textile trade were disappointed to go through a newspaper report that EU had added 15 countries to preferential trading scheme, known as generalised system of preferential (GSP). He eagerly went through the report to find their countries name included. But Pakistan's mention was missing. He was referring to the statement of authorities that Pakistan will enjoy GSP gains from January 1, 2006.
The arrangement was to last for two years. The system grants beneficiary countries either duty-free access or a tariff reduction on their exports to EU markets. They discussed among themselves to fathom the degree of silence over Pakistan's inclusion in the list of 15.
They got one factor that Pakistan has never been considered as the most poor country. Under the circumstances the name of Bangladesh should have been there. However, they for self satisfaction that commerce ministry might have been informed about the GSP.
TP II: Over-dependence one 'cottonomic' is risky, indeed, but the value-added sector has been ignored is a sad commentary.