The much awaited monsoons splashes have touched part of cotton belt in Punjab as initially their impact on crop was not taken seriously but hurdle in the way to seedcotton supply was apprehended during the week ended on July 5, 2008. The spot rate was curtailed to Rs 3650, while rates in ready ruled between Rs 3690 and Rs 3900 plus.
WORLD SCENARIO:
The both ways movement was hallmark of the week, as modest sales and lifting could hardly lead to something convincing in view of the other commodities values report and cotton planting expected bearish as ever in recent past but final sowing report will make shape of things clearer.
The opening day's contract value was key December dropped sharply by 2.78 cents to 78.62 and July gave away 2.01 cents to 71.40 cents a pound. However, the Monday session saw some investors who had bought earlier decided to unload pulling thus contracts down. The wait for planting report ended as USDA once again showed nearly same figure at 9.246 million acres sowing down from 9.39 million estimated in March, however trade put acreage between 8.45 to 9.25 million acres.
On Tuesday decline continued owing to investment fund sales despite the ground reality that development beyond cotton exchange could have given a different colour. However, the players spoke of optimism that coming weeks looked set for a rebound in contracts. Meanwhile planting report had no impact on the growers and traders, as figures were not unexpected to them. The crude oil prices are likely to behave adroitly. How the crop particularly develops mattered to relevant people.
On Wednesday trend sustained, while players looked for ways that will end the losing streak. They expected better outlook will develop before long, brokers said they are hoping to get some direction from weekly export sales. Meanwhile support in Key December was seen at 75.25 and 74.40 cents a pound.
On Thursday cotton futures finished slightly firmer after late trade and consumer buying erased losses before a holiday break, but the weak tone of fibre contracts may spill over into next week, brokers said.
The market will be shut on Friday for the US Independence Day holiday. Trading resumes on Monday. The key December contract rose 0.06 cent to finish at 75.35 cents per lb, dealing from 74.26 to 76.13 cents. Volume traded in December was 8,881 lots at 2:35 pm EDT (1835 GMT).
LOCAL TRADING:
Rise in prices is world-wide phenomenon and cotton is exception nowhere. In Pakistan cotton has no meaning a recent innovative R&D subsidy is key to textile exports. Therefore there is open competition between the sellers and buyers of cotton-latter is also at loggers head for the above mentioned fact and several others will in due course.
Despite the fact that spot rate scaled into the week without any addition, The seedcotton arrival had begun. Rains too have, but perception regarding depend on the sellers and buyers who stand apart. Rains in the eyes of sellers are a boon, as they hinder seedcotton supplies, but buyers inevitably consider a windfall, because production rise is expected. Phutti rate obviously turned lower to, in Punjab, Rs 1600 while, surprisingly better in Sindh at Rs 1700 per 40 Kgs. Despite reservations about price two small lot deals were noted on Monday around Rs 3800/3900 plus.
The spot rate cut was most appealing as sellers had accepted the expeditions seedcotton supplies-no matter received setback due to rains. The spot slashed by Rs 50 to Rs 3700. The usual cheap cotton has not drawn the buyers as they always had some or the other problem, which related to government. The situation on ground seems to have been coaxing sellers; the result may cut some more prices.
On Wednesday expeditions seedcotton supplies put pressure on prices. The couple of deals were down at Rs 3700 and spot rate too was same.
On Thursday sharp arrival of phutti pushed the prices lower on the cotton market. The Karachi Cotton Association (KCA) official spot rate was down by Rs 50 to Rs 3650. Phutti prices in Punjab were at Rs 1550-1600 and in Sindh at Rs 1,650-1,700. Cottonseed was at Rs 675.
According to the market sources phutti arrival was strong and quality is also good, but one disappointing factor appeared that the number of buyers are not increasing after the imposition of gas taxes.
Taxes on gas and cost of productions are also hurting textile sector. According to some reports, textile industry, its biggest source of exports and manufacturing employer, may collapse due to surging fuel prices and chronic power cuts.
Textiles accounts for about 70 percent of country's exports and the sector contributed 8.5 percent to gross domestic product in the first eight months of the 2007/08 fiscal year to February. The g deals reported were 497 bales of cotton from Khanpur Mehar sold at Rs 3725, 200 bales from Haroonabad at Rs 3700, same figure from Chichawatni at Rs 3675 and 1000 bales of cotton from new crop sold at Rs 3600 for 8th July delivery, dealers said.
On Friday official spot rate resisted further decline in the process thing activity on the cotton market. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3650. Phutti arrival was slow, which helped in stabilising the prices.
According to the market sources, several factors appeared on the economic front, which caused fall in the prices and it is most likely that the prices may come down as a result of the more increase in oil prices on the globe and locally further taxes by the government. People related to the textile are looking in crisis after imposition of taxes on gas and electricity charges. The textile sector is hoping that the government will take further measures to save them from disaster. The deals were 400 bales of cotton from Arif Wala sold at Rs 3685-3700, 400 bales from Pakpattan at Rs 3675 and 200 more bales from Chichawatni at Rs 3700.
On Saturday activity improved as higher dollar rate diverted the exporters to buy phutti. Phutti prices in Punjab were at Rs 1600-1650 and in Sindh was at Rs 1700.Since the phutti arrivals started, the prices were on the downside but exporters' entry into the market stabilised rates. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3650. Some 2400 bales changed hands. Prices ranged between Rs3690-3750.
ROZS TURNING A REALITY:
Late - very late not because change of government but Pakistan and Pakistan's under developed part intricate areas would have possibly come out of the centuries old rot. The delay was not necessary unless the sublime idea was to force some thing substantial in return.
Friends in need is what economically weak made this country looks around for Bush who could venture in giant action could have manipulated much before to see RoZs (Reconstruction opportunity Zones) started production for free of duty access to US markets besides encouraging investors to invest in the tribal zones. The current move has been introduced in the house of Representative for creating RoZs in Pakistan.
Earlier, a similar bill was moved in the US Senate in March last. Had it not been better that Bush has welcomed the proposed legislation because it will help stabilies an otherwise volatile region. However, a brief history of Pak efforts to gain permission of Bush and administration tons of money had to be spent on travels by relevant ministers and ever president for FTA and investment but all approaches were soundly ignored. The elections were due and results had to be weighed whether they had any touch of American desire.
For all these months top officials unmindful of security advice, which had hit exports from Pakistan, were dropping like rain water. The hectic efforts ultimately yielded in Administration's. The length of time has not been hinted. Four months hence American presidential polls are due, whether change in negative was possible has been negated by saying that if Barak Obama gets elected will not oppose the construction of the Iran - Pakistan - India gas pipeline. The report has been pretty late as Pak oil minister (and foreign minister) has already hinted at the fact that all is well on IPI pipeline front. The happiness that come in a chain like RoZs and IPI pipeline leave poor people in Pakistan feeling head dizzy?
KNOWLEDGE BASED SECTOR IS A MUST:
The textile sector may have been really hard up with local plus international factor. Late the oil, but a closer look in complaints needs to be looked into problem beset businesses and exports that should be tackled by the owners, approach authorities for all possible help, that mostly constitutes of tax payers blood and sweat. Noises are not anything be heard today, it's an old practice, sources close to cotton and textile sector remind.
But the rumpus is unique and more frequent than used to be. A clout, a friend and any close relative in authority in Islamabad is no harm, but take undue advantage by any one is not fair, circles said. But national touch should always be there so that advantage reaches to as many people, as possible they said.
They said that without being aware why road development, energy development and dams and canals have remained much less than the country and people needed. Even training institutes for labour, and textile related college could be cited.
The doors of importers are knocked for inquiry whether they have such and such dyes or chemicals, but have they ever approached authorities to stress importance of textile machinery and petro-chemical plants? No, perhaps never.
Questions quite often raised in these lines have never been answered. Annually billions of dollars worth dyes from China, India and four corners of the world are imported with taking a pinch why they are victims of high cost of business. If consumers pay little heed the lament of the experts could be eliminator and cause of doing high cost of doing business could be eliminated. The way out seems to be: set up textile towns and cities per plan and pay immediate heed to knowledge based export sector to shed pressure year after year. Their genuine problem be taken a care of.
WTO DOABLE BEFORE YEAR END BUT - LAMY:
The WTO chief Pascal Lamy was never so disappointed to repeat a deal is doable but chances of any breakthrough look to be dwindling. He appeared most optimistic once when one of the most important meeting be smelt nicely flavoured food being cooked next door to the meeting place. However, he stills feel the deal was likely.
The developing countries, which are constantly being asked to concede more ground, are increasingly discouraged. Brazil, which is at odds with the US over subsidies to cotton farmers and have approached WTO body for reconciliation and government verdict in its favour, along with India, complain that agri proposals at the WTO do not open up markets enough dimming the hope of a deal this year.
Every time at certain intervals meeting is held, participants even fix date when deal was likely to be concluded. But swirling snub come face to face even to most optimistic. The time period has been consumed on rigmarolling a simple issue which in its intrinsic sense seeks to make available two square meals to centuries deprived poor and consequently flash of smiles of ever long face.
But even the closest sponsor of not only WTO, but all such world scale institutions like League of Nations and even the UN are meant to stand in times of interest seem at stake downing the wrong or right to dustbin. The way dilly-dalling is being spun is nothing. But to come to terms of influential sponsors. To be sympathetic to someone and giving in alms what pockets contained but keeping tonnes of money in banks, stocks and in the shape of agricultural land.
The WTO seeking equal opportunities for rich and poor is like tell tale to children to go to sleep. Yes, the sources said deal is doable by the end of the year or after change over of govt in US, in EU and India but the posterity will smile why such big and sensible people create games majority just look on.
HIGH COST OF BUSINESS WHO IS RESPONSIBLE?
Had it been in any way related to foreign callousness Pakistanis and possibly the world interested quarters would have made hell the so-called high cost of doing business. The textile sector showed the way and then all sectors sprang up with voice hold up due to free exports. The gasoline's jump in prices apart for which no one seemingly appear to be directly responsible. The rest of issues pointed out by the so-called victims authorities and exporters should in all fairness share the blame.
Apart from oil and government and exporters should have talked over a decade back that WTO is coming and probably Pakistan will be a member and will have to face rules and regulation, terms and conditions. But the knowledgeable sources had no hesitation in blaming more the exporters who do not change every two or three year. The bureaucrats they said have their own story of carrying a host of henchmen just out from academics. The new coalition government is out to build a happy Pakistan.
Favouring a party member but with ability is not as bad as the past practices have demonstrated. Pakistan needs investment but the dream would come true if life moves not in days, months but years from one desk to another. In democracy, which is being talked so frequently and louder than ever, favouring exporters with 50,000 bales of cotton for gains in election is deceptive, the sources scratching their heads said.
High cost of doing business and losing edge in exports may be to some extent to some unfavourable condition but how many exporters, who do not change even now and then, know the rules and regulations. And if some know they think government of the day is to do the needful, the sources reminded.
Infrastructure is a must, but some donor banks are being sought to help in bettering it. Similarly, if a foreign investor gets vexed on time frame for receiving a licence he fondly wants to set up a project?
TEXTILE SUPPORT PACKAGE:
The official sources, who have been quoted in a report headlined textile ministry seeks support package, seem to have studied closely the textile manufacturers and exporters entirety have been shocked on fresh approach. Under new set up, textile ministry has once again been given under commerce ministry patronage, in perhaps keeping with tradition.
The textile ministry in its short span of life had been able to secure, according to sources huge packages that ran up to Rs 30 billion besides R&D subsidies. The new set-up had not found packages necessary any more, had not made it part in 2008-09 budget. But the textile ministry, which has lost its independent identity has now been engaged in seeking substantial package for what officials quoted by report and inefficiently run textile and clothing industry with the fully backing of powerful research and development (R&D) mafia kept solvent on rebates and refunds.
The report said, "the support, if approved would be a complete negative of the 2008-09 budgetary proposal to extend zero subsidy for R&D support to the textile sector. The next step the new set-up takes will determine whether, according to sources textile sector will never be strong enough to stand on its feet. They suggested the government should find out ways to back businesses and exports sectors equip themselves with necessary wherewithal to contribute for the development of this poor and vulnerable country.
The leaders have always dreamt of strong and prosperous, they argued, broadly meaning that Pakistan was meant for all have and have notes. Against this they pointed out that people on top in this country only talk without delivering. The new set-up is tightening belt. All should wish it well.