The two subsequent arrival statements having failed to make the hazy cotton picture clear. Both talks regarding imports of cotton as well as export of the commodity holding the nerves of both the sellers and buyers. The TCP wait has begun. Meantime the spot rate was twice raised to Rs 2400 until Friday.
WORLD SCENARIO:
Future resisted fluctuated both ways on the NYCE as fundamentals remained weak owing to supply on higher side while low consumption but speculative and switch trade kept the swing. The December opened down 1.26 to 11.83 cents and March down 1.31 to 51.28 cents a pound. The futures were weaker on the opening day across the board.
Both speculative sales and switch trade hit cotton contracts down. Fundamentally the market is psychologically nervous, as cotton output has been constantly higher while consumption was not picking up. The Chinese demand has uptill now been static. The leading players are worried on account of continuation of the trend, which has resisted rise, added to these was on record that liquidation of investment funds in commodity indexes, was adding to the pressure for some more session ahead.
On Tuesday futures December and March ended mixed owing to switch trade and covering in spot month by small speculators. Analysts said they still saw the fundamentals as bearish as production is reported higher and imports, particularly at stand still from China. Thus far they said demand for Us cotton has not been large enough to create additional demand. However they hope once Chinese consumers iron out problems with old versus new quota that will change the scenario to cheers like.
On Wednesday switch attracted investors as much as it could, because the market is expecting deliveries in December next week, ahead of the US thanksgiving holiday break on November 22. The contract would expire on December 6. The next move will be watched following December goes into first notice. And looking into export sales, the players hoped will be smaller than previous weak.
On Thursday substantial loss was marked in both December and March futures/ and others, a result of investors liquidating their position in the spot contract. Traders observed that December was making preparations for deliver before 22nd. Meanwhile US total weekly sales amounted to 167,700 RBs within the traders belief. Shipments amounted to 146,600 RBs higher than traders had presumed.
The Friday session showed weakness on usual special sales and switch trade. Players observed as delivery day is closer every player is setting out of December.
They said trading next week may be muted ahead of long thanks giving holiday. Now traders wait how much will be delivered. Then China will come in view, order from China if any. The December shed 0.48 to 47.80 and March shed 0.25 to 51.15 cents a pound.
LOCAL TRADING:
Real picture of cotton damage remaining guesswork in the absence of two-fortnight arrival statement, buyers as a counter measure slowed pace and ordered imports through Wagah. The spinners maintained buying pace, but giving no scope to the ginners to take advantage of the vague situation. Prices remain sticky to the advantage of consumers.
The pace of buying cotton seen in the past week had in the meantime slowed, spot was maintained on the earlier session .The stoppage of release of arrival statement had made the textile miller adequately cautious. In the meantime they contracted around one million bales, with the Indian exporters, some 14000 bales had been in Pakistan. However buyers lifted 11000 bales also from local market. Spot rate stuck up at the weekend level.
On Tuesday the textile millers again lifted over 25000 bales feeling the ginners had been deterred from raising prices abruptly. But they were also firm in keeping prices unchanged. The fortnightly statement release was still away. The sellers were awaiting clear picture about the imports from India where 29 million bales have been produced.
According to exporters they were planning to double exports than during 2004-05, or around four million bales. The spot rate was unchanged at Rs 2375. Talks were also held regarding exports of cotton. What is not understandable that the TCP has not been coming to stabilise the market.
On Wednesday good buying was seen despite ginners aim to keep back stocks. However the change of hands at 30,000 hale held ginners from pushing prices higher. The spot rate remained put at Rs 2375 and rate in ready ranged between Rs 2310 and Rs 2450.
On Thursday buying pace went up sharply, the buyers testing the ginners patience. But the selling pooled courage as they pushed spot rate marginally up by Rs 10 to Rs 2385. The spinners and buyers were out to lift every bale on offer. Nearly 35000 bales were sold, a repeat show seen in the previous week. Phutti in Sindh was selling at Rs 1125/1250 and almost similar amount was being demanded in Punjab. The buying pace indicates cotton consumers are not sure about the cotton damage or otherwise. The show also makes it clear textile exporters are up to.
On Friday as upward trend was likely the spot rate was raised by Rs 15 to Rs 24000, without however any valid reason except millers hectic buying. Nearly 30000 bales were lifted in the price range of Rs 2325 and Rs 2450.
On Saturday buying was on higher side within the prevailing price range.
IMF WORRIED OVER DOHA ROUND FAILURE:
There are the only heartless an those who have to lose nothing if WTO is given green signal but a cup of tea in a month or a year like to make sure butter is present on both sides of the bread. Only because Pascal Lamy had nursed WTO a couple of years he bled in July when he with great pains announced talks are postponed (and not that they have failed). Now one feels the soft feeling the IMF has for Doha Round success or the lasting sign of prosperity on people have waited for centuries.
That who ever is behind the floating of WTO with aim to give to poor without demanding in return what he has is certainly with abundant money and wealth around him. But seemingly he (or they) has stayed in the background while be brought in the fore president of the super power to step in doing good with honesty.
But a president of a country cannot be as Philanthropic in view of the interests of the voters, who send the president to rule. The fact is that the super power or any with abundant power talks to individually enterprise the give and take issue. Only recently Russia was disappointed as everything was ready to declare at St. Petersburg OK, some smatter neighbours with some heart burning but in US good book Moscow negotiators were asked to hands off.
Yes, Russian in the meantime has got the formal entry, but episode some weeks back in St. Petersburg spoke volume how Russia will have to stay with WTO for three years, Doubts are enemy of human being, who spit fire. The WTO is still for from being declared, as a force contributing to well being of those the body has been named for. The IMF's first Deputy Managing Director John Lispsky in an interview with a leading agency, expressed with heavy heart that a possible failure of the Doha round of world trade talks would be worrisome.
He spoke with convictions that liberalising track was critical to continued global economic progress especially for developing countries. It is here that in his tender and sympathetic heart that he has failed to see the "interest" that some people cannot sacrifice whether the man begging for a break will in a moment or two will fall on ground or die is not his best concern.
The man who nearly has failed the WTO in practice, extended unnecessary time to make sure he will win mid-term and will be able to talk with power and strength, is no where Lame Duck President even if goes with Democrats tacit "yes" to be given power to the congress needs guarantee to be as powerful to sign WTO as legal document. IMF's Lipsky has talked of economic growth in Africa was not yet strong enough to meet the Millennium Development Goals set by the UN to cut poverty in poorest continent!
DO TEX MACHINERY IMPORTS PAY, WHOM?
A slight idea has been provided by an article that textile machinery could be very much avoided by applying import substitution. But those who were repeatedly asked the secret maintained deep silence as if the heaven would have fallen had somebody the mistake of opening the mouth. An elaborately illustrated and detailed articles in July 2006 on chemicals and dyes base had enlightened people in deep dark.
These two sufficiently enlightening stuffs converged on conviction that textile town, textile cities, more spacious industrial estates would have progressively closed the existing units. The authorities who are responsible to see cotton supply begin now dirt free, adding more through value addition and certainly pushing yarn exports to the backyard started playing naïve. The ginning institute planned four years back in Multan, textile cities in Karachi, Lahore and Faisalabad made according to knowledgeable sources, to suffer through dilly-dallying in making hand available.
All these are indication that a few textile shops should be allowed to run and flourish without dong good to the economy and country. Those who had floated the idea of manufacturing textile machinery, dyes and chemical plants keeping in view the wider demand owing to globalisation bid saw a chain of exporters started calculating and supplying authorities, worrisome news, who know nothing about the business.
Naturally the PM and president out to take country out of the quagmire found head on plunged into sea of demands to keep textile surviving. A recent article really says that a unique feature of the Chinese co-operation has been the transfer of technology the wholehearted technology transfer in contrast with reservations of the western sources has immensely helped Pakistan achieving self- reliance in many sectors.
The deficit as recently as 2005-06 is a record at $12.112 billion, textile machinery import bill comes in billions of dollar, And unfortunately the spinning machinery co at Lahore and textile machinery co at Karachi has been made inoperative for reason known to anybody. Some months back Chines Textile teams were coming and even talking about co-operation in textile and talked about joint ventures.
But Pakistan starves till today despite local engineering industry has the requisite capacity and capability to produce various items of textile machinery, if foreign technology partners extended support (like China) in terms of design, engineering and quality assurance.
GINNING INSTITUTE MULTAN:
The cotton and textile sectors are being neglected to a great extent. They even at this pace are earning maximum and making the economy and country moving. But where from comes the investment, be it govt or private sector start looking around, money or land or expertise come in the way to block the advancement. Thank God the govt has been very much in power when ginning was rightly conceived , though it look six decades.
A Multan report reveals that a cotton ginning training and research institute could not budge despite lapse of three years since it was announced. The same, in the limelight is land-block. It looks shabby to write that the textile city in Karachi is also in the thinking stage. A number textile town, cities and industrial estates and what not are coming in newspapers in bold letter, but they are more fantasies, than in Physical existence.
The sources close to cotton and textile are pretty hesitant to say that these were considered to keep family well off. The ginning is very important, can be considered from the fact that billions of dollars Pakistan lost in forced cut in prices for cotton being dirt - when the tour was arranged for the gainers it was assured the - free culture was around the corner. When the Lame-duck WTO was supposed to have come with opportunities it was expected that textile machinery plant will soon be set up.
Similarly chemicals and dyes units will be started to make the textile products as cost effective to match the regional rivals. But nothing worth the name has been done to put Pakistan on the map of textile exporters. a major demand of the textile sector for a ministry in like of BD and India was met but the sector is loudly being made to collapse, this or that. Can one hope be it hand for textile city or for the ginning institute is made available. Understandably financial problem has not been mentioned, investment has to be made to export products without any problem.
A NEWSY, NEWSY PAGE:
The November 14, was full of such news to draw attention to write without a topic the writers look for. But the day or date referred to had a couple of news with juicy materials. One such news was that cane crop was creeping gradually into the cotton fields. Not that sugarcane crop just crept into the field meant for cotton but had support of rulers and authorities who matter, when reporter approached one of many authorities said rather loudly that new sugar mills have been enough to serve people.
But this was voice of Punjab Agri secretary Fayyaz Bashir's. He was non committal however when attention was drawn that powerful interest group with political clout expansion of running mills was closed to the news was as striking one could hardly find prepared to accept. The Pak Hosiery manufacturing Association has claimed its members have not received ST refund for four years.
This is just understandable that they must have been facing liquidity crunch. And is this a lone case of refund failure? What however is stranger that cause has been given serious computer connectivity. The PHMA has drawn the attention of CBR.
It is finally hoped, he is already aware of the PHMA and others' plight! It catches your eye that cotton consumers in Pakistan have not been planning imports of cotton from India but a humble quantity of 4000 bales have arrived into inventory through Wagah. Another 10,000 bales were likely shortly. And that initially they had announced 280,000 bales. However, cotton sources have made the cotton import figure pretty fatty - a million bales.
The cotton and textile scenario has been Clumsy'. PCGA is not issuing fortnightly statements of arrivals. At times ginners raise spot rate and rates in ready-just to trim the rate shortly afterwards for the last 5/6 weeks daily local buying is showing around 35/50,000 bales.
The government is under warming to do something to support the textile sector enabling exporters to beat the competitors who have emerged on the scene from two regional countries India and China to BD Malaysia Vietnam, Thailand, etc. Pakistan has mussed the cotton production target from 12 million bales and has been expecting over 10 million bales. If Pak wants to buy cotton India has produced 29 million bales and had indicated can feed even China. But what's the hotchpotch and what's going on?
TAIL PIECE: Assuming that transporters agenda was something different from what they were pleading for may not be entirely true. But loss from strike could no doubt be immense, because it had hit mainly imports and exports. The towel exporters who seem to have dedicated to earn forex from value-addition have roughly calculated loss worth $5 million per day.
The transporters had given the call on November 14, whether strike has been called off is not clear. However, the bedwear exporters and garment exporters have not come out with calculated loss amount but there loss could be somewhat more than given by towel exporters. the textile exports, which had never been paying the kitty to get out of its thin Physique has been showing deteriorating sign for the last three months.
Govt is apparently doing better than previous govt used to, and it is hoped that textile exporters won't let themselves down, particularly after receiving Rs 30 billion package. This is evident from steeped up buying pace lately, beside bold announcement that they have contracted with India for importing one million bales of cotton.
The hurly burly exposes textile exporters had never been so serious ever in the past. Textile exporters, though it is responsibility of the govt to back up exporters under the new situation due to WTO, should also face the grim situation like exporters rather like any shopkeeper.
Until Friday strike picture was, according to reports, supreme council announced to call off strike on assurance of resolving all issues, and another story said textile industry from spinning to value-added garment, made ups and home textile units has begun downsizing of work force.