The rising dollar has been pushing cotton prices up, however, the solace is local currency with sliding downward, which will go a long way to boost textile products. The spot rate was raised by Rs 25 to Rs 3375 while lint prices ruled between Rs 3150 and Rs 3600 with exception of few, which quoted at Rs 3700-3800per maund (new crop).
WORLD SCENARIO:
Players indebted to fluctuation on grain markets in Chicago, gasoline and even beyond to metals value, decide to sell or buy cotton affecting the futures down-July down 0.27 cent to 69.29 and new crop December shed 0.33 cent to 71.51 cents a pound. The players were looking for weekly export sales and report on cotton crop condition for determining a direction to act positively.
On the second session investors who indulged in selling on the opening day decided to buy on signal from record run in crude prices, leading future, to recover rather substantially. The major operators took que from outside markets, which were showing strength across the board.
Nevertheless, they considered finish below 71.80 cents would make any advance suspect. They started count down on supply/demand USDA report on Friday. The data will be first estimate of supply condition in 2008-09 (Aug/July).
On Wednesday futures moved both ways with out grip on any direction. The players were tightening bely to adjust position ahead of a USDA report about supply/demand, the first estimate for 2008-09. In the US sowing at 25 year low, the traders have focussed on how much cotton land in top consumer China and India is going to be fixed. They hoped exact sowing and size of the land will be decided and world will know shortly.
On Thursday the futures rose on short covering by investors plus steadier commodities report from Chicago and elsewhere. The wait ends in hours to determine futures trading patterns as supply/demand report will be out on Friday. The analysts are convinced cotton sowing in the US will sink to a 25-year low 2008-09 as farmers run in search of gainful corn soyabean etc the worry is also hovering whether China and India too will fall on other crops instead of cotton.
On Friday futures ended higher pulled by the record oil futures prices despite setback caused by profit taking. The players are eyeing coming gains in coming week as USDA estimate say should give cotton futures a boost. It put cotton production at 118 million bales (480 Lbs) against 120.47 million in 2007-08. The surge in futures swing players into dancing with slogans 'cotton turned a corner'. Anyway July cotract rose 0.70 cent to 71.55 while December rose by 0.88 to 8023 cents a pound.
LOCAL TRADING:
Perhaps the last of the PCGA arrival report eagerly awaited which gave nothing extraordinary except that the target had to be missed by 250,000 bales. The report boiled no one, neither sellers nor buyers.. Sellers with nearly 500,000 bales left with them they felt was manageable. Both these, of course, concerned about the size of price level, ginners how to extract maximum and their customer were thinking the existing stocks could be exploited to gains.
However, the buying had gradually contracted to level of a few thousand bales around Rs 3400 to Rs 3700 per maund. The spot rate was cunningly preserved at reasonably higher level unchanged at Rs 3350. On Monday, the day when PCGA report was released merely two deals could materialise between Rs 3400 and Rs 3600. While striking advance deal the quoted price was considered by many buyers widely manipulated to keep running lint price firm. However only 2000 bales in two lots were seen changed hands.
On Tuesday buying remained restricted to more or less 6000 bales, one deal fetched Rs 3700, the highest so far. Spot stayed put. Rising dollar caused worry among consumers as price hike was expected. Simultaneously, manufacturers and textile products particularly rejoiced expecting falling PKR value may attract importers towards Pakistan.
On Wednesday no trend change was marked as millers avoided to show buying interest and sellers refused to budge. The result was firmer trend and low buying - restricted to only more or less only 1000 bales. Spot rate was firm at Rs 3350. The two deals changed hands were priced at Rs 3150 and Rs 3375 depending on quality. The international trend with no positive direction has lost its impact on the main trading centres of the world.
On Thursday the ginners decided to raise spot rate by Rs 25 to Rs 3375 but buying support remained restricted to 5000 bales sold between Rs 3500 to Rs 3550 depending on quality. The restricted buying usually tell on prices but the sellers explained the slight rise in prices was owing to gradual erosion of PKR versus US dollar.
The Friday session saw few bales lifted some with delivery during August. The setback was obvious because worries lingered on about crop and rising oil prices. The spot rate stayed put at Rs 3375, while advanced sales for delivery in August was priced at Rs 3700 and Rs 3800 which many commented is cosmetic and too bulky. However, growers have their own problem of short supply of Irrigation water in the beginning and shortfall and high input costs. Now is the time to show who is end winner the seller or buyers?.
On Saturday, the following deals were reported as some 183 bales from Mirpurkhas sold at Rs 3475, 250 bales from Pethoro sold at the same rate, some 4800 bales from Liaquatpur at R 3425 and 1000 bales from Rahim Yar Khan at Rs 3400.
BANGLADESH TEXTILE WORKERS GET SUBSIDISED FOOD:
The BD textile workers learnt very recently how defenders of the right in Chicago were favoured with their demand. The BD workers in textile industry contributing handsomely to the economy the other day noted in textile hub Dhaka demanding relief from soaring prices and better day. Not the bystanders but rioters themselves would be surprised the employers decided to offer them subsidised rice. Out of a total 250,000 textile workers, two lakh workers will benefit.
According to the president Bangladesh Knitwear Manufactures and Exporters Association Fazul Haq, BD's garment industry is leading forex earner, in fact like nerve for the economy and country. He was sure had not a quick decision come for the relief, it would have been nearly impossible to deliver as per prescribed time. However, under the scheme a worker will collect four kilo (8.8 pounds) of rice (staple food) a week from hurriedly arranged subsidised outlets in the nations main garment hub, Dhaka. Appreciating the surging prices in quick succession world over Fazul Haq said he knew how much poor earners of huge forex for the country had been hit without any salary raise.
Owners outlets, be informed will sell at rice at least 30 percent less than market price. The cheap food is part of the initiative to help backbone of the economy.
This religiosity surfaced when BD Finance Minister had urged company owners to spend some of their profit on subsidy of food for their poor workers, as he advised that existing corporate culture should be changed for the welfare of the deprived.
The textile workers plight in Pakistan could be well imagined, where all round slum is apparent, sources said, adding that government announced per month at Rs 6000 wages for textile workers seems in dear doldrums.
BT COTTON HITCH STRETCHED TOO LONG:
The two new varieties CEMB-X CIM-482 Bt and CEMB-X MNH 93 Bt have kind consent of Minfal to be introduced during coming season. The varieties were tested by the PCCC for one year, through national co-ordinated variety trials (NCVT). The experts not without reason seemed to be reluctant to get the two above varieties approved by provincial seed council and understandably okayed for sowing smaller land holding so that in case the varieties do not show promise, losses will be low. Anyway despite a bit of confidence, the experts advised Minfal not to take risk as the varieties introduced by (NIGBE) had not been cleared. In fact efforts to grow (cultivate) these two in an area of about 5000 acres in Sindh and Punjab during last Kharif season had met with total failure.
Authorities in Pakistan seem and quite naturally to hurry up and catch up with regional rivals like India China and even Indonesia have already harvested well and nearly doubled their usual cotton yield size. The report from India said Bt cotton contributed significantly to the yield from 308 Kg but per hectare in 2001-02 to 450 Kg lint per hectare in 2005-06.
So far "failure" has been reported in case of Pakistan but details lack. The Bt cotton which has been said to the failure in Pakistan, and authorities are far from confident the large yield giving Bt will ever succeed in this country where thus far cotton is required to save mills here from going inoperative. The country's well-wishers pray the Bt varieties show promising results in Pakistan where cotton along with other input, causing products uncompetitive.
Unfortunately our researchers and experts have not proved match to couple of deadly known diseases like mealy-bug and CLCV, something should be done to raise cotton output which authorities weigh mills needs in a couple of years will be more or less 20 million bales of 177 kg. In the meantime better care should be applied in case of emerging diseases to minimise the losses. The insecticides and pesticides or such should be prepared within the country. And, in the meantime Minfal should ponder sending some farmers to America, China or India to get a closure look how farmers there tackle to get desired yield of Bt cotton in Pakistan on return.
WATER MUST FOR COTTON TIMELY SOWING, YIELD AND QUALITY:
The haphazard action picture painted by the Sindh Abadgar Board, if correct can only be regretted though losses as alleged in billion could not be recovered. But what is possible that the story is not repeated once again to perpetuate losses to Sindh farmers and province. The spirit of unity that apparently seems to have been generated any action, which tantamount to weakening Pakistan should be discouraged. Opportunity available now calls for taking full advantage to give effect that 2008 polls have offered after six decades.
Cotton has been backbone of the economy, as agriculture is said to be. That cannot be side-tracked for minor gains here and there. Cotton besides being exported as pure raw material knitwear, garments, fabrics, bedwear, towels when added value turns out to be single largest forex earners in Pakistan. No wouder why the textile exporters have been trying to convince the present government rather loudly how it has to come up with help to let stand it on strong feet.
How strange it sounds if the allegation is near any truth that rice and cotton sowing had to be delayed for two months. All know late sowing and harvest neither yields bumper quantity nor offers good quality. But according to Sindh Abadgar Board it happened last season. The report said that growers body meeting called upon the high ups to possible probe what led to the saga. It alleged that Wapda's action of releasing water from Tarbela Dam for power generation, neglecting the decision of Issa and agriculture expediency.
This meeting, harassed by negligence of authorities, cautioned that past experience of rivers indicated that the current dry spell could last for years. Hence, the authorities must plan in advance to tackle spell on war footings. That could help facilitate availability of water for irrigation if cotton production is desired to meet the entire needs. And also facilitate production of other crops such as wheat and rice which most likely wont be available from abroad. Authorities would do good to ensure that whatever surplus crop, be it cotton, wheat, or rice possible be in surplus are judicially used to save people or mills from starving.
KNITWEAR PROSPECT:
A jump in exports of knitwear from 50 million dollars to one billion dollars is quite appreciable and encouraging, that too, in 10-12 years. The latest position today is entirely discouraging as for some adverse situation the rivals have taken over the traditional US, European and even North American markets. In business and exports such rise and fall is always probable, but it is for the businessmen and exporters to lay hands on wrongs that could be mended primarily by themselves and then to approach government for doing its part to make export products competitive.
But the manufacturers and exporters while available whatever is from government they should know the basic requirements and move government in helping them to meet needs as far as practicable.
Taking report in print media on May 2, in which former chairman Pakistan Readymade Garments Manufacturers and Exporters Association has regrettably spoken about knitwear industry in this country is facing worst ever crisis and sodly gradually losing share in the world markets mainly due to abolition of quota.
As a matter of fact when quota abolition is brought in entire textile sector falls in the category of the knitwear. The country, which greatly had been depending on the forex earned by exports of textile products are constantly being reported on decline.
So struggling merely for the knitwear cause to keep it going and going well, invites that cause fought for should be the entire sector including fabrics, garments bedwear, towels etc. The former PRGMEA chairman who had the privilege of being President Lahore Chamber of Commerce and Industry has store of experience said be felt rather without hesitation to admit that Pak exporters solely depended on quota and did not prepare for the post quota regime. He suggested the need to improve labour and management skills which he considered vital to improve production ability.
He indeed has gone quite far in admitting inherent shortfall. But the chairman while enumerating causes of drawback such as Pak input cost on account of high electricity and gas tariffs as well as unprecedented gas and power load-shedding is much higher as compared to China, India, BD etc, thus exporters fail to compete in the world markets. The sources close to cotton textile business while agreeing with the chairman desired to know whether Pak exporters fell sure every thing they need are available locally or have to import draining out billion of dollars.
PAYMENT REMAINS PENDING:
It was expected nearly two dozen of Pak exporters of home textile products would have received the payment of $30 million US based. But it proved to be like day dreaming for nearly same period textile exporters had been constantly making noise that high cost of doing business was likely taking on their liquidity owing to keen competition with well equipped and self sufficient in almost all their needs rivals. Perhaps the exporters had been confident that their labour and hard-earned money will easily be paid in due course. But while the fresh export products getting tough time, not only for the scarce resources but also occasional constraints in delivery on time.
Naturally the story is very sad as $30 million remain stuck up for over four months which could have provided liquidity and would have helped double forex earning by addition at export products. One or two things however remain mind boggling why such big consignment by over two dozen exporters at any stage sensed rat smelling and particularly that US was nearly surrounded by variety of economic and exports problem.
The reports are quiet on subject whether during pestering four months party was approached and his/ their response. May be as sources close to trade and exports, on guesswork traced the election time had space only for one thing whether to find a way out to tackle through govt help the high cost of doing business or to approach battered Indian importers based in America. And now as they have been out of election jungle focussed on their products worth million tying probably uncared at American ports.
Most lilely any agreement on export/import was not in writing rather on mere understanding. Any reply regarding such thing could highlight the fact and real cause for neither unloading the consignment nor making a single penny against $30 million accord. The pretext, as is given by the exporters from Pakistan that importers have filed with court bankruptcy and as exporters are confident US government was likely to help the importers in every possible ways including financially. So the exporters as an alternative have demanded that their home textile products should either be sent back to Pakistan or should effect payment immediately. Oh, the ports demurrage?