Production shortfall and presence of TCP on the market affected cotton trading and prices during the week ended on April 8, 2006. Around 25000/30000 bales were sold. The spot rate on realistic count was brought down by Rs 25 on the opening day to Rs 2400.
WORLD SCENARIO:
Futures fluctuated both ways on switch trade, spec sales and buying and on hopes of Chinese order surge besides optimism that weekly export sales would depict positively. The May contract opened a shade down at 52.57 and July set on journey down at 54.57 cents a pound. Small losses were marked on the opening day in switch trade as investment funds transferred positions out of spot contract before deliveries expected shortly. Analysts said the upcoming visit of a Chinese delegation spur the sales to the Asian joint.
The second day's session turned higher with most players' content to monitor the weather and crop conditions across the US. Development would provide direction to trading and price.
The players stuck up in prospect of weekly export sales. Drought like condition in Texas was anxiously watched being the important cotton growing area. However, the Chinese delegation visit in upcoming weeks was hoped to give new lease of life to cotton trading.
On Wednesday rise sustained to a 2 1/2 week high. The speculative buying was behind spurt. There was some switch activity as players moved positions out of spot May before deliveries on April 24, 2006. Export sales plus Chinese team visit was keenly awaited with optimism to enliven market. The export sale through the week was estimated which is a practice before official USDA weekly report.
On Thursday modest trade and speculative sales led to fall in futures value as the market seemed to back off after surging three weeks high. Traders said they were disappointed but said they were down through but holding above support level. In the meanwhile the USDA weekly export sales showed US cotton sales at 276,800 RBs (500 lbs) down sharply from last week's. Some switch trade had also its share of impact on the value of futures. The Chinese team's arrival is anxiously awaited as what it would offer is in nobody's knowledge.
On Friday both contracts rose owing to speculative buying before release of government production report in the coming week. The deal China is about to sign on Saturday is expected to boost trading switch business was also seen as players moved position out of May. The May contract ended week at 53.97 and July at 55.85 cent a pound.
LOCAL TRADING:
The production shortfall claim and TCP presence generally hit cotton trading as a result of which spot rate was drawn down and buying of some cheap quality cotton got a boost. The spot was down Rs 25 to Rs 2400 without upcountry expenses. The prices in ready ruled between Rs 2325 and Rs 2435. The corporation sold cotton to both exporters and mills.
On Monday when the week opened with the ginners founding conditions unfavourable reduced spot rate which exposes the goings. Ironically enough both consumers and sellers expected some help coming from world cotton rate but they were disappointed to note futures were keeping irregular.
Second day's trading was also modest despite low ruling prices. Some mills in look out for cheap cotton bought nearly 5000/6000 bales. The TCP had been haunting as other factor like low production. But according to authorities production will meet mills needs. Spot stayed unbudged.
On Wednesday buying support improved as mills entered to buy quality lint. The players discussed production level which consumers were considering short. The PCGA early April statement was, perhaps the season's last, which had continued to show lower production than this time in the past year. The TCP tendered for 50,000 bales but sold 38000 to exporters 20000 bales and mills got 18000 bales. More or less consumers bought 10,000 bales.
On Thursday buying on the previous day pushed prices higher. Spot rate cut on the opening day recovered to Rs 2425. The buying support was slowed as only 6000 bales were sold.
On Friday ranged-bound prices was seen as buying failed to gain momentum. The spot rate maintained at Rs 2425 on this day. As usual there remained grave confusion over production estimate being projected. Some 7000 bales lifted as consumers turned apprehensive cotton shortfall will not meet their requirement. However, the coming days will clear the confusion as that always has happened.
On Saturday only one deal was reported and prices remained range-bound.
14 MILLION BALES TARGET:
The government will set a "tough" 14 million bales production target without special incentive to motivate growers for enhancing estimate. The Federal Agri Committee perhaps has enough knowledgeable people and experts who can say on authority that a survey was conducted and likely production was estimated at 14 million bales. Incentive is a word has been used when exporters are in trouble. Such calls have always been heard and after looking into pros and cons incentives are released.
Packages are also common today, that could be offered who shed their blood and sweat to contribute towards well-being of the people, country and its economy. But the benefit of labour should also reach the farm labourers. The peasants have only worked and their meek voices drowned in the so-called "louder shouts." Give peasants a call the country needs their services. Their minimum needs should be given care to desist them from shifting their mind to switch over to some crop that would ensure two breads.
The government probably knows how much peasant work and how much he gets in return. The cotton production estimate should be nearest. Even if half-a-dozen spirants feel like offering their honestly surveyed estimate should not vary widely. The planners have been almost always getting misleading figures, that if seen in wider perspective, the rulers must know whey the country is far behind of those small and much less resourceful have advanced to be soon recognised as the giants.
The present target of 14 million bales is achievable and growers have always stood by the spinners and textile without regard to manipulations that at one stage prove they stand by the callers. The country needs 14 million bales to keep the growth rate in two digits, exports to $14 billion and resources to surge, subject to nature remaining favourable, will not fail.
What however government has to see the rise people of this country has seen and how much farm labourers have? But for planning sake figures have to be brought close to corrections as possible. The sowing of cotton crop is about a month or so away in Sindh.
With that will begin the new Kharif season for such vital crop like sugarcane, cotton etc and with that will start how the 14 million bales are growing in the fields and how they are being treated by nature. With that start shedding blood and sweat of the farmers and the day when cultivation will start. God Bless the crop is bumper will lift as when they will require and if the crop gets damaged by floods or viruses, cotton consumers will look out for imports. Local cotton prices will be high.
TEX UNITS IN SRI LANKA:
The Sri Lankan exporters of mainly kirana items such as coconut, spices etc gradually picked up some fabrics from Pakistan and started export of textile items in which Pakistan was pretty shy, the garment. Importing cotton and spin low count yarn was for them too cumbersome. If God would have gifted them with cotton they would have willy-nilly put in some money and labour. But falling on fabrics for adding further value they must have loved as that was rewarding. Now government plans to extend maximum facility to Pak manufacturers of textiles for establishing units in Sri Lanka which enjoys European Union's generalised system of preferences plus scheme. The government perhaps is fed up with spoon feeding and then treating them to oxygenate and enable to work again the knowledgeable circles said.
The textile is a word that covers adequately making of low count yarn. It is hoped, they said, the units set up in Sri Lanka by Pakistani textile manufacturers these Pakistanis go beyond spinning yarn or merely producing grey cloth. If the government has had some discussion with manufacturers it must have come to know what manufacturers would take to.
As far as EU is concerned have considerable scope to absorb apparel and such items added with value. The manufacturers of value-added goods in Pakistan are not happy with concessions anti-dumping duty as they are still unable to compete with India and China. Government should also be careful as the manufacturers in those countries form the EU are not happy with low cost products streaming into EU.
The reports that still have to be little pronounced may get cover through some sort of protection or even ban. Care also should also be taken, sources said that if money is involved it should upto 85 pc to make units viable to bring back some dollars to fill back government coffers. The healthy units also get sick cause of which has never been known or made known. The cause or causes are always beyond the power of the manufacturers to keep units running they said adding that knitwear units numbering dozens were bulldozed by WTO.
FELLOW BANGLADESH:
Not long before, Bangladesh were after Pakistanis manufactures, of value-added goods. It had reached maximum exports in garment and was a favourite in the field. Their bad luck was that they don't by nature produce cotton. They would probably be engaged in producing low count cotton yarn and with that they would have gone to produce cheap grey cloth.
It was correct therefore on their part to go for value -addition and garment production. The WTO rule came and came with that LDC which status they enjoy. The Bangladesh is looking for knowledge to produce value-added textile besides garment invites experts in Home textile production in Pakistan. In fact, according to BD sources India experts are already there and getting the benefit. The Bangladesh enjoy by virtue of being LDC.
The Pakistanis are visiting BD and looking the prospect in the meantime govt is looking for experts who could train workers in textile industries. Such experts were made available under a scheme from JICA. The first batch of senior volunteers. Who spent 24 month here achieved their purpose of coming here and were given hearty send-off" the other day.
The govt plans to have more such experts to import best of skills as to be able to compete India, and China who have left behind all others, Pakistanis being no exception. Govt aware of the opportunities and challenges started doing what was possible and still doing to bring textile production on the map of the world. But it seem it has not studied weaknesses inherent among the manufacturers. It is investment that has deliberately estimated low but profit margin had always been on top, said knowledgeable circles.
Even today govt bid to improve the textile govt proposes to pour money upto 70 pc less 15 pc compared with practice, they said. However, so far no picture has emerged about the heavy weights of the textile manufacturers and exporters and World Bank desires that Pakistan follow BD example to try community-based alternative energy plan which it said has worked well.
EXPO 2006:
The idea in subconscious that not all produce that could have 2006 a real thumping success, would be textile machinery along with Italians. Plus also the chemicals and dyes that brighten the textile products and cost effective too because being local. That some chemical and dyes are being produced in the country is just nominal as 95% according to bazar people imported from India, China & Europe and elsewhere.
Thus, in the eyes of some who are close to cotton and textile trade, The Expo was to introduce foreign products to Pak manufacturers and exporters. Some of these people bad smiles on their faces that the machinery are a craze in Pakistan. The fact needs to be declared that Pakistanis are unable to manufacture textile machinery and chemicals and dyes and till eternity. It would be difficult to coin works to praise that blind man, who were with honour called to site mills in owner limousine to point out where was the fault that machines stopped working? On arrival the machine switch was made on, some crackling sounds somewhere and the blind man said the technicians prevent something.
The blind man hardly back home and the machine had started operating in proper ways. It is also important to note that during 1965 war fighter plane parts were shown to some mechanic and he performed the task he was expected to. The plane could fly with locally made parts.
It is painfully noteworthy that tractors in thousands are also even today being imported despite often hearing about Ferguson Tractors and Taxila tool factory. What's snag in Pakistan not to have some machinery inscribed on it "Made-in-Pakistan." Hours before ex-governor State Bank of Pakistan said that China wants make a machine, it buys that from any country, gives that a Chinese shape and markets same for sale as Chinese.
The above two cases speak enough of art, skill and intelligence of Pak engineers or mechanic, but there is something nefarious about whole thing that importers exporters like people prefer machinery to buy even 2nd, 3rd hand, sources pointed out. The government has the means to track down the factors and effectively handle to change the trend to put country on the road to progress, development and prosperity!
TAIL PIECE: The two leading textile and cotton organisations have come to a point to avoid litigation at all costs which they have for years learnt to have been cumbersome, lengthy and costly. The lesson was imparted in primary classes. No matter, better late than never. The two committees involved through arbitration, mediation and reconciliation. The good sense has prevailed even they will accede too late. If that sense will have permanence it will not only serve their interest but the interest of the country, will better economy and bring smiles on faces.