Irregular trading continued as spinners got ready to pay more to the sellers. The spot rate stayed put until Wednesday then after a couple of changes, came back to last week level of Rs 3,300. In ready the price was stretched Rs 3,550.
WORLD SCENARIO:
Bereft of smooth moves on the NYCE during the past week, cotton remained indebted to other crops for its own face lift or otherwise. The May on the opening day rose sharply - 1.94 cents to 72.21 cents a pound while December was up 1.87 cents to 82.70 cents a pound. The opening day saw rising trend on the strength of outside (markets) factors and improved technicals. The market however was eagerly waiting for the first crop condition report from the USDA. On Tuesday, the Monday trend could not be sustained as funds indulged in profit taking spurred by weakness in other markets.
On Wednesday cotton trading in futures managed to end on strong note. The trading followed Tuesday's pattern, but soon the crude prices and host of other commodities including metal, soyabeans, wheat etc reigned supreme. The weekly export sales, continued low. On Thursday the cotton sales were superseded by sustained investment buying. The growing condition in cotton-belt has not been clear yet and the traders are still awaiting indications.
The lint showed upward trend during most of the weekdays. The traders found little in fundamentals to fix a direction and wait lingered on. On Monday when market opens USDA weekly crop condition and weekly export sales reports will provide some insight into the trading.
LOCAL TRADING:
The cotton trading in local markets resumed cautiously as both the buyers and sellers developed their own perceptions about shape of things to come. Monday's trading was marked by condition remaining mostly unchanged - spot rate holding at Rs 3300 and phutti prices ruling in Punjab and Sindh at Rs 1200/1600 per 40 Kg depending on quality. Over 6000 bales changed hands in the price range of Rs 3355 and Rs 3490. The stocks with ginners were gradually slimming, market sources said, guessing a price hike possible.
Selling was marked slightly down on the second day but ginners raised asking rates by Rs 250 for quality lots. Around 5000 bales of cotton changed hands at prices ranging from Rs 3250 to Rs 3550 per maund. The feature of the trading was that exporters with surplus stocks offered to mills as both thought no one had suffered any loss. Market sources said that buyers were willing buyers as they would not find cotton of available quality any cheaper. Spot rate however was unchanged at Rs 3300.
On Wednesday trading slowed but prices stayed firm. On Wednesday, when more or less 3000 bales of cotton changed hands between Rs 3400 and Rs 3500 per maund. Phutti prices kept unbudged since Monday around Rs 1200/1600 per 40 Kg. The trading in cotton was affected by violent in Karachi.
The higher asking prices finally told on the spot rate on Wednesday when ginners decided to raise the same by Rs 25, to Rs 3325 per maund. The consumers on sidelines rushed to market and lifted nearly 14000 bales to avoid losses from price hike that was to come. The phutti rate stayed put at Rs 1200/1600 but slight improvement was seen buying that ruled at Rs 3050 and Rs 3350 per maund.
On Friday spot rate in a surprise move was pulled down by Rs 50 to Rs 3275 which none could explain. Only a day earlier spot price was raised and within 24 hours pulled down sharply. Despite downing spot rate buying was restricted to only 2500 bales. Phutti rates were unchanged. The deals were struck between Rs 3300 and Rs 3500.
On Saturday the Karachi Cotton Association (KCA) official spot rate was up by Rs 25 to Rs 3300. Phutti prices in both Sindh and Punjab held the overnight levels at Rs 1200-1600. Nearly 1800 bales of cotton changed hands between Rs3375-3550. It was observed that the prices of fine quality of cotton did not show any weakness but some ginners, who have big stock of inferior quality, tried to sell below their psychological levels.
HAD ANY PAK MADE MACHINERY EXHIBITED?
Textile Asia 2008 exhibition of textile machinery in Karachi would be over by the time this review is in print. And, of course orders worth billion of dollars were booked, but none for exports. Every year authorities are held responsible for the ills of textile sector and Pak share of textile in exports stays at just three percent. But neither authorities nor the textile millers ever discuss the billion of dollars worth of imports by the exports sectors. So pertinent question hovered whether 2008 Asia provided opportunity to see any Pakistan made machinery.
The machinery imports have been claimed going down. Is it because the orders were booked locally in the last fair. Tahmina Daultana, federal Minister for Science and Technology expressed satisfaction that such exhibitions boosted the country's economy. Others who spoke on the occasion held the view that machinery exhibition by 27 countries (including Pakistan?) creates jobs and enhances production and exports.
But the relevant sources commenting said the authorities never asked whether exhibited machinery included Pak Brands? The SBP is under obligation to honour call for import of machinery and release money to ultimately create jobs and manufacturing and exports.
LET THIS NOT BE UNPRECEDENTED:
Through an advertisement the KCA desired to carry out a study how to improve quantum and quality (spinable value) of cotton production in Pakistan which has declined drastically in the past five years. It said qualified consultants are sought to assist the KCA in the assignment. If further said knowledge of agronomy, entomology and botany is essential with practical field experience of cotton cultivation. This small ad is followed by addressed the qualified and experienced consultants are supposed to apply to.
The KCA has said nothing about it's aims, at but one can understand it hopes to improve cotton production quality, quantity wise in view of the rising demand by the mills, exporters of textile products. This indeed is the need of the hour and had always been.
The move is good, was needed ever since cotton trading started in Pakistan. The country which never had flourishing exports and economy, no doubt will gain. The improvement in cotton production and improved quality should also accompany training of labour and certain neglected infrastructure.
HEDGE BE RESTARTED FOR GROWERS GAIN:
The KCA had been conducting hedge trading in cotton until 1976, when operation was stopped. Excepting a few years, the KCA has struggled hard to get hedge trading resumed but for one reason or other met with disappointment. According the KCA it was on February 28, that a meeting of the representatives of textile industry KCA and concerned government departments had decided to restart hedge trading within three-four months at national commodity exchange. The report speaks about a committee formed, comprising representatives of KCA, cotton growers, ginners, ADBP, Aptma and representatives of the State Bank of Pakistan. The KCA however said in the report it was not in favour of restarting trading at national commodity exchange, but favoured venue to remain at KCA with experience in hedge operation and necessary wherewithal. Besides, the KCA has 320 licensed cotton brokers with well equipped offices at Cotton Exchange Building to facilitate cotton trading with ginners, spinners and exporters.
MEALY BUG COSTS RS 30 BN:
Most reports, since February 18, seem directed to caution government (new) about what ails the economy and how it should be to tackled. The story reminds of mealy bug attacks, with apparently no efforts to fight effectively, which forced authorities to cut back large quantity out of 12.5 million bales target twice, bringing down to 11.6 million bales.
The latest story, however, comes as a follow up of some report from India where 52 scientists have been deputed to research and invent cures against the unfortunate attacks. The report make particular mention that the authorities in India took immediate measures despite the fact that actually production loss was less severe there. It should have prompted authorities here to take steps to save cotton crop from mealy bug and CLCV attacks.
But it seems, according reports, the mealy bug has power to suck and destroy dozens of other crops. The report adds that even the essential pesticides required to destroy mealy bug were not available when first attack was detected.
According earlier reports quoted by knowledgeable sources, plans were initiated to produce pesticides locally but no follow up action has so far been, to anybody's knowledge, except the fact that imported pesticides available in local markets nearly disappeared and, if it was available, four times more money was being charged. They said it was advisable to produce the pesticides as importing them at great cost ultimately adds to high cost of doing business. The experts advise cotton growers to plough their farms immediately after cotton harvest since the bugs shift to weed and continue to grow there.