Firmer conditions obtained on the cotton market as ginners' patience worked despite delivery on imports any day. The spot rate was up Rs 25 to Rs 2600 while in ready prices ranged between Rs 2350/2700.
WORLD SCENARIO:
The cotton futures in NYCE trading lacked strength and closed generally mixed or faced marginally down trend, while players waited and talked about spring planting report to get at a direction.
The opening May futures lost 0.20 cent to 53.71 cents per pound. The Monday session moved slowly in dreary business. Meanwhile a strong rally in corn prices was bound to hit severely the US 2007 cotton sowings and was likely to emerge during the fag end of the next week.
The second day's session saw the futures marginally lower owing to speculative and option related sales. The long wait appears close to end on March 30, with the USDA annual planting report. The players noted with regret that all the figures were sharply below 2006 cotton plantings of 15.276 million acres. Besides the guess work, fact was there continued to be a dearth of news but most analysts will release their planting estimates adding to the pent-up excitement that the report had generated.
On Wednesday futures closed mixed naturally so because market remained trapped in range bound business ahead of next weeks potential plantings report by the government expected to down substantially. In a recent industry conference some traders opined that fall in sowings is a rally in corn futures and the likelihood that the use of more corn to produce the alternate fuel ethanol will lead to higher corn plantings in 2008.
On Thursday futures turned firmer as small speculators bought some. The trading will move somewhat in a natural way following next week's report about spring plantings. Meanwhile most analysts believe the USDA data will show cotton plantings sharply lower owing to sharp gains in corn figures. The weekly export sales reported at 314,300 RBs caused no ripple among the traders while shipments reached 241,400 RBs. The data was taken quietly.
On Friday session weakened as futures ended mixed as the potential planting report reaches closer the March 30. The May ended higher by 0.05 to 53.27 cents a pound.
LOCAL TRADING:
Cotton in pipeline from abroad hung like sword of Damocles over ginners who had to stay in pressure from buyers and kept prices attractive for the buyers. The spot rate had to be raised early in the week to test the buyers needs. The buyers also showed they were quite willing buyers until full flow of cotton delivery started from various sources. The low toned information was afloat that shipments may reach any moment. But were expected hence spinners and millers did not disappoint ginners and bought good quantity with a day or two gap. The ginners were keeping prices at reasonable range to suit buyers perception and yielded good profit to them also.
On the opening day the spot rate was raised by Rs 25 to Rs 2600 and in ready asking rate was observed at Rs 2700. The outlet was also satisfactory for the ginners at around 15,000 bales. On Tuesday buying spree was maintained on two counts, firstly import delivery was not imminent and prices were likely to the raised by the sellers.
Despite slight reservation the buyers lifted another 1200 bales in the price range of Rs 2300/2600. At one stage when import news was afloat, ginners were contemplating to sell at even throwaway prices to save themselves from severe losses but a little wait was paying them dividend. On Wednesday cotton buyers relied on information that some supplies were expected so they bought around 2000 bales to keep ginners in humour and guessing.
On Thursday a rise in buying activity was marked despite asking prices were higher as one could expect. But ginners have adopted avenging attitude as imports were in their view not required. Ginners had been showing opposition to imports, but submitted to the policy which allows export and imports of cotton. The reservation apart, over 3000 bales of cotton were lifted. The prices ranged between Rs 2650 and Rs 2675.
On Friday markets were closed on account of Republic Day celebration.
On Saturday some 2500 bales changed hands within the obtaining price range. Spot rate remained unchanged at Rs 2600.
SHOULD GROWERS BE DISCOURAGED?
All the govts show commitments towards growers and naturally so because, cotton needs have continued to grow. But the authorities have always been on wrong foot when growers have beaten the target. All sectors have been almost addict to imports, particularly so, in the name of forex earning through exports. Authorities, some of them have interest involved too, must be sure growers lose patience and switch over to some paying crop. Growers have often declared loudly that they have burnt unsold stocks before Press Club or on roads and won't be making same mistakes.
But when they receive call to raise acreage and spend more to serve the country's economy, they forget the past and start sowing cotton with added interests. The ginners often relate their own interest with growers. That's perhaps not all true as the growers visiting cotton market often reject.
The authorities, who are not tired of claiming that they are committed to safeguard the growers interest. But past experience as the knowledgeable circles observe is that once the spinners and textile millers express satisfaction, all committed people keep mum on voices raised by the cotton growers, a fact.
It is happening lately too that growers wakeful nights and days, rains and drought, spurious drugs at double the market, has never been checked much to the sufferings of the particularly growers who own small piece of land.
The day cotton is ready for harvest and marketing, the growers are in earnest need of money may it be for return of loans or some social obligations, they are pressed to dump their produce and realise payment later. The system has worked against the growers and authorities, which claim stand by growers should help them get right money.
In some years growers are pressed for producing 15 million bales from present around 10 million bales. But growers have limit in patience. What here authorities have to do is to restrain imports in the name of quality cotton on importers request. The market seems to be faced with similar situation right now!
AFRICAN COTTON GROWERS:
How can help African cotton growers and their govts accusation the ill effects western countries policies and self interest. They are appearing more and more vexed at the call and promises poor of the world will have the gains and wealth they have aspired for centuries. The so-called people holding the reigns of global trading or newly decorated WTO which they want poor to give access to their markets against simple promises.
They Doha Round has entered into 6th year trying to give it a concrete shape though it misses sometimes nose, ears or properly set teeth in mouth. The WTO chief who had strong background of trade and business of the EU, has been passing a sort of disgruntled soul receiving bad sermons from the US and his own set of EU states. Both the countries who hold the reign to effectively produce WTO to the world people are grabbing each other without any visible return.
During July 2006 meeting by and large EU offer was quietly accepted by the poor, but some great countries whose contribution was termed inadequate by all, pressed the EU to squeeze some more to match-match with their own termed inadequate offer.
Being the so scenario France stepped into the contest saying the EU had given enough to squeeze out any further. The WTO chief had then suspended the clumsy looking talks. The world had then received the message the WT0 has come to end because rich won't give but stick for more and more. Every year African cotton growers are trimming forecasts as low world prices and a weak dollar and administrative woes dull farmers enthusiasm for white gold. Output from the regions main producers are seen dropping to 2.47 million tonnes in 2006-07 from over 2.52 million. Even then growers do not get enough price for the above reasons to meet both ends squarely.
HOW LONG WILL IT TAKE TO MATERIALISE:
Once the Karachi Textile City emerges on the scene, and sooner it starts penetrating into the world that is in wait for them, the textile products. the world will see with touch of glee that the sector will gain the place it actually remained under deliberate strain for the last six decades. The textile sector exports which slackened said to be oversight on the advent of WTO, the global trend was subjected to be responsible. The WTO rules did not block any country rather they raised the sales and income.
On reason the start of three textile cities and a couple of textile towns was delayed was threat govt faced from textile exporters that slump had been noted with advent of WTO which in Pakistan caused high cost of doing business.
Secondly it came to be noted more that textile sector received money from respective govts enabling exporters to effectively combat competition. The 60- year history is a witness that Pakistanis have always grudged any country's progress instead of taking that as a challenge and made efforts to bring progress and prosperity to this country.
However, the news with dateline Islamabad proved somewhat shocking at first sight. But on reading a few lines the truth was there - Karachi was the locations. But so far it was not clear how many decades it would take to come to export stage. Textile sector seem to have surrendered to the high cost of business doing and naturally govt can't go on oxygenating the sector at meagre earning from sports, surgical goods, expats remittances, and rice and wheat exports earnings. Mere news that Karachi Textile City will have self powered generation plant, desalination plant and most modern facilities. Or that it will employ some 80,000 people as such things do not please the men living on a "Khat" at the periphery of the industrial areas.
The authorities should realise that three years have been consumed in superfluous considerations. The 700 acres were okayed by the Port Qasim Authority. But why 700 acres only. The initial area was 1200 acres, the remaining 500 acres were expected to be released after PQA had seen 700 acres were used. City erected production and exports likely to be started. But the progress speaks delay is - undoubtedly long.
IT'S DEDICATION:
The Bangladesh garment exporters are hopeful they would be aiming at doubling their exports from $9 billion a year to $18 billion in three years. At present they are hard up due to uncertain political conditions. This country had received offers of % 500 million to cover importers gap in receiving garments from BD. Now that interim govt has taken over the task of achieving higher economic growth, said Anwarul Alam Chaudhry Pervez, president of the BGMAEA. A military-backed interim govt is in charge of holding credible polls and to restore industrial-social stability to allow greater economic growth. Serious anti-corruption drive has led to dozens of arrests. People of Bangladesh, particularly the businessmen and industrialists are banking on the positive outcome of interim govt measures.
However, despite country's special status or LDC, Pervez noted with concern that BD needed increased access in the EU markets. Exporters hope that the heavily busy interim govt should make efforts to gain more access to European markets and push for the successful conclusion to a trade bill already said to be under discussion with the US decidedly BD's biggest export market.
Besides the political disruptions, garment industry also suffers from internal problem leading to strikes and small skirmishes. But according to exporters, exports pace are maintained and only garment industry earns double of Pak export earning from cotton, yarn, fabrics, garments, home textile and other materials.
These days Pakistani exporters are engaged in joint ventures with brethren in Bangladesh to help them in particularly in production of home textile. Indians have been also invited and it is understood they are contributing in exports of Bangladesh. Presently exporters of Bangladesh are faced with odds due to sort of lawlessness and uncertainties, though, arrests and other measures have been giving people peace of mind. They have been asking the govt to be in contact with EU and US govts and importers. What, however, is important to note is that BD earns $9 billion annually through exports of only garments whereas Pakistan had been showing an earning of around $6 billion annually.
TAIL PIECE: High cost of doing business in Pakistan cannot be done away with govt packages or by diverting pensioners funds to enable exports at competitive rate, commented experts close to cotton and textile business. Machinery continues to be imported in disguised way and chemicals and dyes imports in thousand of tonnes - sometimes tonnage is declared and ignored at other times.
A dozen of times experts have raised question what hitch is in Pakistan people do not set up textile machinery plant or chemicals and dyes manufacturing units. Nor is it ever mentioned China and India have credit to have textile machinery produced locally. Similarly they need not to import chemicals and dyes from Pakistan rather they do export billions of dollars worth of these items to Pakistan. Even govt is silent over the issue as if a clarification is a sun. exporters have authentically reported India, China subsiding exports but they are ignorant about local machinery, chemicals and dyes which effectively check high cost of doing business.