Low trading was pronounced on the cotton market as monsoon rain brought both sorrow and glee. The spot rate remained unchanged at Rs 2600 during the week ended on July 8, 200
WORld SCENARIO:
The scenario was lethargic on the NYCE market during the week with one day break on Tuesday being closed for US Independence Day. The players now wait for reopening of trading.
On the opening day futures on the NYCE dipped on speculative sales that meant that prices may slide further after a brief holiday break. Cotton market was going to remain closed on Tuesday.
Fundamentally the trading focus of the market has turned to growing condition in major cotton producers like US and China, both hit by drought like conditions. A continuation of drought conditions through this summer Texas will be mostly dry with scattered showers on Wednesday and then drier for the rest of the week when the cotton market resumes operation.
On Wednesday contracts closed firmer as speculative buying was witnessed. The players had not bought any on Tuesday being the closed holiday fo. The hope is pinned on export sales and supply/demand reports which would perhaps offer some direction to the major seller/buyers. However, no favourable news break was there how drought like situation was faring in Texas and other areas suffering due to dry spell.
The Thursday trading was as featureless and motivating factors were missing. The Chinese drought like conditions have not been showing abatement. The Indian favourable monsoon signalling good crop can help China but America looks around for a better sale prospect. The result was all contract contracted on lack of demand.
October was down 0.10 cent to 51.15 ad December was down 0.30 cent to 53.16 cents a pound. Supply/demand report on Friday may help demand depending on the situation, however, the supply would be more than demand or otherwise will depend on the USDA report.
On Friday contracts maintained downward trend as supply/demand report failed to back up trading and fell nearby and distant ones. The players had nothing but to look for trading when it resumes on Monday.
The persistent dry weather is affecting marketing against the wishes of the players, however, it would be all clear on Monday how things move on.
LOCAL TRADING:
A long wait appears to have been in luck for cotton brokers and growers as well as the buyers. Rains have been generally welcomed. The spot rate opened and ended without any change. Few bales changed hands.
The first day's trading passed off without any deal. The brokers said as the prices showed firm trend spinners kept to the sidelines hoping ginners to come under pressure and lower prices.
Besides, the TCP weighed to float tender for 33,000 bales weekly share keeping in view that ginnes are discouraged to raise prices abruptly. Official spot rate remained stay put at Rs 2600. The TCP tender will decide future sales pace on July 10. Spinners and millers are expected to spare not a single bale for foreign buyers.
On Tuesday trading in cotton bettered as a sole deal was reported finalised in depressed going. The miller surprisingly were not reluctant to purchase cotton but ginners apparently avenged depending too much on TCP. The corporation could release from its remaining stocks boosting miller courage. The spot rate remained stay put at Rs 2600. On Wednesday buyers rejoiced monsoon favours and hoped to get cotton at low rate.
However, the day was not as happy from trading point of view as only a single deal was reported that is 200 bales of (new crop) from Rahimyar Khan at Rs 2550. The spot rate was unchanged at Rs 2600. In current crop no deal was finalised and buyers waited for prices to come down and to hear some news from the TCP. The ginners sources were expecting, would be preparing to compromise with the situation. But they won't say how long will it take.
On Thursday leading buyers kept to the sidelines obviously to watch the supply and price trend following widespread downpour. The rains are likely to dampen supply position and transportation will be difficult. The spot rate was unchanged at Rs 2600.
If supply is delayed far more than expectation the millers will try to buy cotton from ginners subject to prices, their option is open to lift all lots provided by the TCP. The arrival of new crop was great consoling point which took away by rains which the governing clouds show is likely to pursuit.
On Friday the trading maintained pervious day's trend the buyers waiting on the sidelines to see price fall. The rains making supplies somewhat difficult were likely to change ginners stance to stick to higher prices.
Millers were sure prices will come down as ginners will exploit the opportunity to push stocks. The delay in cotton supply temporarily will augur well for production due to timely rains. The spot rate was unchanged at Rs 2600.
On Saturday there was no change in the situation. It appears as if sellers and buyers were trying each others' patience.
LET TEX SECTOR BE REPLACED:
The suggestion was in the air that textile sector has now outlived its worth and the replaced by some tech base sector, but the idea was vehemently opposed on the ground that the textile was not fully exploited.
Barring some very enthusiastic and ready to take risk and turn millionaire in due course of time, spinners somehow got some spinning machine from Japan etc and made low count yarn and sang God is in the heaven. Some enthusiasts somehow come to know that one pound of cotton becomes ten times richer if value is added.
Value addition has remained a headache for the most who claimed to be part of textile sector when information technology made name in neighbouring India and America saluted the big city Bangalore and visited and had no shame in bearing if it was possible.
The so called textile sector (low count manufacturers) who were fed enough by govt at the cost of real textile producers like bedwear, towel and garment manufacturers, whispered it was better textile sector had now been replaced but on the scene emerges Dr Mahbubul Haq a great exponent of value addition. But he could make some indelible marks in textile even today South Korean take the garment with respect.
But in his country low count yarn continued to impress the authorities with annual export earning of $8 billion. In the meantime textile exporters" were getting louder voice to give sector a minister -like Bangladesh and India which where exports have been on the rise.
In Pakistan either finance minister or commerce minister grabbled the privileged position and whether with or without knowledge of textile owned the ministry and made mess of the sector. Good luck a textile minister has been gifted to the textile sector due since decade. The textile minister so designated kept us all waiting whether finance or the commerce minister will easily give way to gradually we assumed the textile minister will make his way to the ministry and a place. The textile exporters must have been expecting textile sector will flourish and without much labour and cost. Lately the textile ministry has conceived the idea of a package of Rs 47.2 bn needed to reducing cost of doing business in textile and clothing sector while warning to one and all if the textile industry failed in competing in the global market the country would go bankrupt. God save the country.
INDIA HOPES TO HARVEST GAIN:
India is overly certain to get flooded with cotton harvest with monsoon rains visiting Gujrat state very much in time Gujarat is largest cotton growing areas besides, Maharashra, Andorra Pradesh, Haryana and Punjab. Monsoon rain encouraged local farmers to go ahead wit both local cotton traditionally and transome seeds, which gave a record crop during 2005-06. Farmers have decided to pay little attention to sow popular sheet-food-ground nut.
They have been clear in their vision to avoid groundnuts also because there have been persisting report that China and USA have been hit by drought like position as forecast by the US National Oceanic Atmospheric Administration (NOAA) may further erode crop size despite larger area. Forecasters Meterologix has at intervals been reporting about merely showers.
And all their forecast stand by reports there are states and even some areas where monsoon rains have been experienced but sufficient rain has yet to come to give crop like. Gujarat and elsewhere sowing has not been as fast as in Maharastra. So far according to farm ministry statement sowing had been completed over 1.68 million hectares (4.15 million acres) up from 1.52 million at the same time a years ago.
Whether Pakistan has found BT cotton suitable or has not so far tried this brand, India has been sowing and reaping good size since 2002. The past four season have qualified this crop and proved int free from bacteria and other common cotton pests.
The transonic seed results have been so successful that farmers have been proving more and more and current year 90 percent of the cotton area in Gujarat was under transonic cotton while the share was 65 percent and 40 percent in Moharashtra and Punjab. The monsoon period still hold the cotton growers are praying for rain in deficit areas, India has been third largest cotton producing country after US and China.
The growers available at the cotton market visiting it said BT cotton has been under experiment. In fact they said the cotton appreciate the gain and problems with which we are saved but prejudice is barring the adoption as elsewhere such as in India. The sources said they were not suggesting for adoption or otherwise as growers are better to understand where lies there gain. However, India report spoke good about the crop from transonic seeds. Cotton export last year according to report was estimated at around 4.6 million bales. Gujrat alone exported 3.9 million bales to China, Bangladesh and even to Pakistan.
WHY BUDGET MISSED PACKAGE:
The govt had made perhaps a package in the 2006-07 budget but left the issue.. Majority forgot but why should they who were supposed to gain. The number could not be counted but a couple of sort of attacks were hurled showing that sector giving the most of the forex annually, despite its tiny size, was in desperate need.
May be the authorities would have forgotten or may be they would be looking for some opportune moment to send wave of rejoicing in the rank and files of textile exporters through a scintillating package. The supposed losers, however, took no time to remind, emphatically that textile industry had approached for loan relief, they had combined irrespective their diverse interest, size and contributions to country's economy, and approached or arranged to approach to see PM to come to textile sector rescue and the most being the huge package demand by the textile ministry born some months back.
The authorities are very used to such demands and approach but when it reminds of bankruptcy they must at least feel jolted. For sometime past the FTA and BIT with America are in background, textile town, cities and big industrial estate in Faisalabad have also been not heard.
Of course, US related long term defence and energy plans have been in news which often proves too optimistic. India has in view of America for long and the USSR was coming in the way.
Now the terrorists of today who dragged Soviet Union troops out of Afghanistan, nay sir, from the world scene. Unfortunately chain of history for both the USSR Union of Soviet Socialist Republic and the sarfaroshan or the freedom fighters of 80s and today's so-called terrorists. Anyway the textile sector has opened several fronts and onlookers will be eagerly watching the spectable going probably more or less sugar way. Initially a lot of check and nab and finally "jholi full of packages. Why textile sector should lag behind sugar, contributing govt kitty far less?
LOOKING END YEAR FOR SOLUTION:
Hoping against hope is not bad. But hoping right for decades and yet continue to hope may not be bad but is certainly waste of time. It is much talked about WTO whose Doha Round was launched in 2001 with full hope disappointment won't confront sponsors.
The renowned writers have been looking very hopeful the Doha Round will see successful end by the end of 2006. But slight touch of disappointments do peep as five years have been consumed in negotiating and at the end of talks expressing that "we have reached something of an impasse - but does not mean that the round is dead.
All those who had signalled that time has come when poor should have good and comfortable life, as the rich have not been fed up as could be read in creation of foundation by exceptionally renowned software miracle Bill Gates and very recently Warren Buffet parting $31 billion to contribute to Gates foundation. The top philanthropic show has been prompting top workers and journalists to say the new 21st century might prove to be the age of charity.
Simon Jenkins has taken for granted that the 19th century was the age of capitalism while the last one was of socialism? However what is vexing that around four decades of multi-fibre agreement (MFA) and Uruguay Round etc are taken together the WTO with much of philanthropic ingredients are far from the moment of truth.
Tired 149 member states, after holding a number of G-7, G-8, G-10 and hosts of other get together has failed to yield any result but the hope that Doha Round is not yet dead? A fortnight back no one but Pascal Lamy the WTO chief himself found reassuring that by June end WTO will see the "Dawn" now July is considered to produce some result otherwise 2006 end will surely see the poor of the world will all round smiles on faces. How funny however does not seem that recent reports mention states (WTO members) asked WTO chief Pascal Lamy to try deadlock in global free trade negotiations.
This approach clearly vindicates that individual states have failed to make other states move. But united Stated has all but said that it will cut 60pc subsidy on the agriculture, the European union repeats that it is reasonable. Brazil and India demanded unless US and EU give more they are not going to open their markets to the extent other countries want without matching. Sorry, said the commentators, who are generally pessimistic, any more in this (WTO) connection will only be repeatation.
Better wait until the US president has completed his term and let the very first sun's rays shine on the zenth of K-2.
TAIL PIECE: All quarters were firm that govt do something to facilitate exports to compete adversaries laden with miracles that boost products exports. The export target at 17 billion dollar for some was also partly ambitious. Some had taken it as a challenge and tightened belts to achieve. But, while miracles from govt failed to reach hands and month by month.
Account taking showed export, were not on line and , infact, gradually shipping from penny to penny-showing at the 11 month an export shortfall of dollar (not rupee) 800 million, the fact has left for the govt a message that why necessarily be too ambitious and for other to celebrate for being so sharp to see shape of things to come a year ahead.