The ginners quietly bowed to pressure as new crop arrival started and consumers continued to maintain pressure during the week under review. Introduction of Bt cotton from 2007-08 has generally been welcomed and its seems growers will now be better prepared to hit target at 14.14 million bales. The spot rate was pulled down by Rs 25 and similar switch over was seen in asking price.
WORLD SCENARIO:
The players have been disappointed as nothing is coming to help in smooth trading of cotton for weeks as planting report has been sketchy and over shadowed by several of spring time storms. Thus futures are victims and they opened May down 0.54 cent to 49.10. Elsewhere July was shown down 0.59 to 51.50 cents a pound.
On Monday futures were hit by speculative liquidation in the absence of good incentive. The markets were looking to hear from USDA about planting report which they had to wait for another hours.
On Tuesday futures downed by speculative fund liquidation and option related sales naturally pushing futures to 5 months low. The fact was that USDA report on spring planting from 22 percent by this time last year and five- year average of 16pc. Thus market quietly had to digest the report until more scintillating one to give strength in trading.
On Wednesday slight firmness in futures was marked on modest speculative short covering. However market was looking the strength or otherwise for the weekly export sales which may show strong sales and a positive direction after weeks of downtrend. The Chinese hope of increased orders has now diminished and traders taking consolation the spring plantings may be lower, more than expected.
On Thursday inevitable happened hit by barrage of speculative fund selling to finish sharply lower. Once again market shrugged off US cotton weekly export sales which hit 556,900 RBs while shipment reached 362,500 more than traders had forecast.
Now spring planting conditions clear picture alone will give a new life into cotton trading. China has planned to give subsidy to farmers owing clearly because subsidy has been the major issue blocking the WTO and factors are major powers.
On Friday trend change was marked futures rising on speculative fund sales. But market view had not changed. Declining trend next week likely to continue.
LOCAL TRADING:
Small lot buying has been marked during the week as buyers believed their pressure on the ginners would bring relaxation in prices. The ginners who wanted to be kept informed about cotton deliveries from abroad. The tug of war has continued, so far, however it seems the sellers have been in command of the trading.
The spot rate stayed firm for most of the week days at Rs 2725 and asking prices were in between Rs 2600 plus and Rs 2800 per maund. Against the expectations of the spinners the prices were kept firm, ginners claiming stocks are well under their control. Under such goings the Monday had no business owing to push and pull. The prices were showing downtrend in New York trading great hope that local market will move along. But the keen readers of reports a landing in Pakistan say that demand world over would be tight and as a consequence push prices higher.
On Tuesday needy buyers had to step in for immediate needs despite sort of policy to buy as few bales as possible. The ginners had no hitch in offering not the best lots which ranged between Rs 2715/2725. The continued international situation pressed ginners to express the difficult situation they were in due to price differential in world and local markets.
However, they kept hopes alive for change could be seen following entry of private sector exporters in the market. The players also were aware about the present constraint in meeting export target and govt offers to enhance the exports.
On Wednesday, buyers cause new certainty ginners will come to terms on prices as they were doubly pressed. But ginners claim they have manageable stocks and textile millers need might not prompt them to yield. The solo deal fetched sellers Rs 2800.
Thursday's session featured because of new cotton crop marketing. Early arrival has, besides the world rate, prompted to slash spot rate by Rs 25 to Rs 2700.
On Friday feature seen in trading was entry of new crop. The buyers-sellers seemed relaxed on introduction of Bt cotton. On Saturday saw the continuation of prevailing Situation.
SUBSIDY FOR CHINESE GROWERS:
China can do so despite WTO roadblock and keen watchers to set wrong doers aright. Several cases were brought to WTO reconciliation body, this is besides the question bore no result. The more abhorring is the delay in delivering justice - only could be said to be inordinate.
However, China not necessarily is showing its strength that pointing to the power right at the moment commends. The better and prosperous economies can do or undo a thing. The EU and US stood against the textile supplies from the Chinese exporters and China bowed to their dictates. China had to cut its size to suit the lucrative markets.
The WTO body need not to intervene, powers were enough to force violators to cut to size. Now the difference is that the powers have been be wrong themselves not committing to subsidies the two powers are granting to their farmers and even in respect to other sectors. China is not at odds with the violators of the rule without any sense. But it has suffered had to cut down sizeable products to export to the US and the EU. It, however, had been a continued customer of these countries despite politely giving in to their protest. China continued to import US cotton despite adamant US to remove or cut yet the size of its subsidies to farmers.
Around three million bales were imported by China despite itself being one on the largest producer of cotton, and, acted as a support pillar for the US. It could engage more land for the purpose but it had not done to grow more with subsidy or without it. China in doing so had in view America is allergic to it yuan and its value that US claims had been kept below world's other currencies for obvious reasons!
The other 150 members including the EU had been asking the power to clear the way for finalising WTO deal by making subsidies to zero to give respect to the world organisation and to the centuries suffering poor, but response lacked always!
SHOULD NOT GOVERNMENT HEED:
The nine months textile exports have crossed $8 billion mark, higher than used to be some years back. There is however still chance to be higher in remaining months. The report says the raise meant growth of 7 percent during July/March. The textile exporters see the rise not much encouraging as had there been no research and development (R&I) facility provided by the election facing authorities.
According to report major increase has been recorded in raw material products like yarn and cotton yarn, a traditionally hot cake for importers. The optimistic authorities had used certain incentives under certain pressure expecting around 18 pc growth still. The setback has been caused by a number factors to name a few, and according to sources, remain ever increasing cost of electricity, high rate of bank rate, and short supply of cotton. The problem has been multiplied by globalisation of trade, which however has not apparently hit all the immediate competitors.
Others have rather gained and have not been heard making hue and cry. The front ranking competitors India and China have for last several decades were making all necessary investment mainly in production locally of textile machinery, chemicals and dyes. Their exports of textile products, therefore, don't face much competition.
On these questions neither textile sectors opens month not to govt announces investment in these is not possible and tons of worth of chemicals and dyes land almost every day and millions worth dollar textile machinery finds way into industry. All payments are made in foreign exchange. Anyhow the report warns quoting textile exporters that good performance is next to impossible without continue facility of R and D which seemingly govt will have to think and possibly sanction.
PAKISTAN IS COMMITTED:
Pakistan is of the view that, name anything, Taliban or al Qaeda emerge from hunger. The govt therefore has been doing to remove that by creating scope for better education and job opportunities. The recent misgivings expressed by some quarters may be of some concern for Pak govt but not entirely. That shows Pak govt understands that it is in its interest to keep in control the disgruntled people for smooth running of the govt and peace and progress and of course prosperity.
Thus it makes clear that the govt is committed to fight and help fight so-called disgruntled groups without risking country's sovereignty. The govt's efforts to seek BIT and FTA with US or EU is to improve the economy of the poor country, and continued failure is the firmness with which govt holds the country's sovereignty, besides, may be force required for convincing powers in Pak representatives. While efforts should continue strategy should also tried without hurting those who already are trying their knowledge without achieving success.
There is not doubt, in govt intention but it seems international situation has not been favouring this country's progress. For the last four years Free Trade Agreement has been fought but even once it did not appear Pakistan negotiators close to any deal. The US offered BIT but it offers no certainty to hold for time that could ensure positive yield. The clause govt irks most is that investment could be taken back instantly without any chance to prove profitable. The authorities have now expressed will lead to boost in Pakistan's exports.
Sources recalling one such approach but EU had refused to favour with this agreement. It was probably time when EU had rushed to India with offers to sign Free Trade Agreement but the country had enough to agree to sign immediately. Pakistan thought it was opportunity to be favoured by the EU but had not succeeded. It is learnt according to sources that some private textile exporters had some agreement. Let us see how that made up the shortfall.
WHAT TO MAKE OUT OF IT?
Apparently whole WTO lot who make it seems anxious how to give it a life. The US President Bush who still have the mandate and once members decide on subsidy and tariff agreeable to all will WTO become a reality. But what is there in the background that emerges suddenly and time built spread over weeks. A couple of weeks back Pascal Lamy, WTO chief could smell, pleasant one coming out of kitchen.
But then, has to say but -. This "but" has not been in any ones control. And, if this continues until to expiry of Bush's signature, will show no one has been now honest about its life and health. Very recently, after Cairns lengthy, communiqué, issued in Lahore, report head live WTO to intensify tariff talks, regenerates hope.
The report emerge from HQs. Geneva says WTO member state decided the other day to intensify talks on lowering customs tariff despite absence of agreement between the four key players, the EU, US, India and Brazil. Does this assertion is like hoping to give a man life without a "heart". It says the multilateral process can no longer be made to wait for contribution of smaller groups quoting WTO chief.
Pascal Lamy. Earlier in New Delhi meeting the participants had agreed only to aim for a compromise by mid-June, the time limit when a finalised deal could be sealed. "But" remains there as such deadline and limits have not been pushed through. The two of the G-4, such as the US and EU had not probably ever thought after they had announced how far could they go. Since then dilly - dallying in the word could only be used to show how things have moved not only from week to months but years.
The fact that after a month or so if there is no outcome found, offering billions to poor through WTO deal will be dream unfulfilled, and, in fact, WTO is a commodity leading members cherish and derive most.
TAIL PIECE: It may be deals and MoUs seemingly have not incorporated Pakistan needs most. Such as textile machinery manufacturing plant, units producing dyes and chemicals. But should it be called oversight that dyes and chemicals importers and the authorities allowed to drain out hard earned foreign exchange with their eyes closed. Recent deals in China include plastic sector with Pak partners. However, why so manufacture was not considered.
The cost, whatever may be its size, after 50 years it will show how self-sufficiency pays. Oil excavation was not gainful but not it has been so to even thing to go into deep sea, Dyes, chemical and plastic products are must to make country self-sufficient practically. But even multinationals who supply some a mix of locally produced and mostly derived and supplied by mother or sister concerns have not seen, how much Pakistan has been losing certainly without serving any purpose. The silence on why manufacture of textile machinery, dyes and chemicals is according to circles "criminal". Will somebody even come forward and oblige this infirm country economically ever.