At the start of the week the lint rising prices were causing hurdle in normal buy when ginners acted on their threat to rationalise gas and oil prices besides doing away with certain additional charges they were refusing to pay, brought trading to almost total halt.
The spot rate was at Rs 4150, while rate in ready on the first session was marked at Rs 4250, as normal trading activity was missing. But scenario changed with the ginners calling of the strike on acceptance of their demands. The spot rate, which was raised to Rs4250 brought back to Rs4150 and lint prices eased to Rs4075-4175 range from the peak of Rs 4300, on closing of the week on August 9,2008.WORLD SCENARIO
As investment fund's continued liquidation did not stop, brought prices down to 11-month low. The other commodities, too, aided cotton retreat. The players observed cotton was so easily being swayed by outside markets. The threat to Texas cotton crop from tropical storm Edouard did not impact the trading. Low wind was welcome for the crop, while any turn to hurricane will lead to thrashing and firming up prices. The December contract retread 2.76 cents to 69.13 cents to a pound.
On Tuesday slight downturn was marked as speculative short covering interest was noted petered out. The contracts dipped to 69 or like amount. The storm had threatened to create some trouble in the Texas cotton growing areas, but latest report show it had considerably weakened. Instead, it will offer relief, players hoped. However they brace for receiving nearly 17- out of it 9 likely to be bothersome. They are also interested in August 12, release of supply/demand likely to furnish first detailed look at the crop during 2008-09 season.
On Wednesday futures rose as prices extended a phase of consolidation near the 69-cent level with players eyed on supply/demand report next week. Meanwhile the trading likely in the present range to take a shape when data would give the first detailed look at various crops. Long term fundamentals are considered favourable due to lower ending stocks and reports about low acreage being planned world over.
On Thursday the NY cotton futures ended up over two percent extending a bounce from Tuesday's 11-month low below 69 cents a lb on options-related buying and outside market strength. Cotton for December delivery settled up 1.82 cents, or 2.6 percent, at 71.38 cents per lb. The session range spanned from 69.56 to 71.43 cents.
On Friday the NY cotton futures lost more than three percent by the close, caught up in broad-based commodity sell-off stemming from a US dollar rally. Cotton for December delivery closed down 2.21 cents, or 3.1 percent, at 69.17 cents per lb. The session range spanned from 69.05 to 71.30 cents.
Volume traded in the December contract hit 9,358 lots by 2:49 pm EDT (1849 GMT).
LOCAL TRADING:
The prices were hurdle in the way of large scale lifting until late last week (August 1) that ginners strike put further end to it. Phutti supply and ginning of cotton completely stopped in nearly 800 units out of more or less 1200 ginneries. The ginners are last of those, who resorted to not only threat of action, but closed down mills on Friday.
The spot rate was put at Rs 4150 on Monday and 200 bales solo deal strick was seen at Rs 4250. The market sources were expressing surprise at the dull conditions such, as ones are being observe will add to cost of production further. The imported cotton will ease situation seems next to impossible.
On Tuesday with the background bullish development was signalling the spot rate rose further by Rs 50 to Rs 4200, said to be short supply of phutti owing mainly to ginning units remain closed due to announced strike to reach their grievances that hurt their interest.
However, phutti in Sindh was reported down offered at Rs 1700 and 1750. Punjab did not see any sale of phutti and cotton, naturally. Nearly 1000 bales of cotton changed hands, in small lots, priced at Rs 4250 to Rs 4300. Meanwhile, rains causing harms to life and property was seen beneficial to cotton crop. There was no news on strike from any quarter, while cotton prices leap higher.
On Wednesday spinners and miller in a fix picked up some 2000 bales under uncertain near term development as ginners' strike continued, phutti suppliers on ginneries door step awaiting to deliver. The ready prices were seen between Rs 4150 and Rs 4200 more or less. Meanwhile, there is sketchy news about monsoon rains that are said to be good for cotton crop, spot rate was unchanged at Rs 4200.
On Thursday Higher trend was seen. The official spot rate again raised by Rs 50 to Rs 4250 amid strong demand. In the ready business, the phutti prices in Punjab were at Rs 2000-2025 and in Sindh at Rs 1850-1950. Ginners' strike caused sluggish business and rising trend in the prices. Phutti arrivals were continue with slow pace as recent rains are favourable for the crop but if the rains continued for a long time, may damage the standing crop. Some 1100 bales of cotton changed hands within the price range of Rs4225-4300.
On Friday, easier trend was seen on the cotton market amid expectations that the ginners' strike may end after the ginners' meeting with the Chairman of the Federal Board of Revenue and the textile secretary.
The official spot rate was kept unchanged at Rs 4250. In the ready business phutti prices in Punjab were at Rs 1950-2000 and in Sindh, at Rs 1800-1850. Market sources said that the phutti arrival continues and the ginners, who have unsold stock, are trying to sell them due to attractive rates. In the meantime, after the rains in cotton belt, the mealy bug has become a serious threat to the crops including cotton. "The pest has the potential to destroy crops if not managed properly," says a release issued by media liaison unit (MLU) of agriculture directorate Multan. According to an Australian cotton broker, the world cotton prices could gain 20 percent or more during the next 12 months and also causing an attraction for the farmers as they may switch away from planting other crops.
Some 1400 bales of cotton were bought and sold at Rs 4175-4275. On Saturday, amid hopes of better production and end of ginners' strike KCA was able to pull the official spot rate down by Rs 100 to Rs 4150. Around 8800 bales of cotton changed hands within the price range of Rs4075-4175.
GINNERS STRIKE:
Whether or not this unfortunate thing should have been come to pass, is to be judged by those who have done and those, who are in know of thing. The ginners had been showing their inability to pay Research Cess imposed by textile ministry in 2006. The PCGA is stated to have never paid, except however, few. The ginners have never given valid reason except advancing inconvenience in payment. For two year they were working without honouring it and perhaps was linked the payment of research Rs 5 perbale with renewal of working licence, which ended on July 30, 2008 and dead line PCGA had threatened to close working of more or less 1000 mills.
That fateful day came on Friday. The ginners claim that they had not seen any move from the authorities whether some solution was likely, meaning decision was firm on both sides. Now, the 2008-09 season has just been in slow or fast seed-cotton arrival is on. How long the tug of war continues will depend on solution or at least efforts to solve the problem. On international scale, according to reports production was likely to be low as subsidies are being lowered and other crops ensuring better return. Today textile products' exports are backbone of economy.
Under the circumstances any body could see bad days are ahead. When all was nearly, repeat, smooth the government had to import cotton at the cost of rupees one billion. The strike, that is to be indefinite, can make things worse. A report recently carried good news that government earned rupees one billion worth through exports. But cotton exports can block exports of textile products, which earns maximum forex, employs maximum number of unemployed, such qualities could hardly by ignored.
AS MANY ORGANISATION, AS MAY VOICES:
A year back the names of two/three associations appeared in newspaper reports suggesting or demanding something to improve either quality of the products or edge in marketing. Today, since the slogan touched the sky high-cost of doing business with smaller gaps associations started sprawling with hardly wide apart voices.
The most sought after demand was by all and sundry for continuing or at time enhancing the value of R&D (research and development) subsidy. The previous government under very pressing conditions had coined under cover subsidy to avoid objections for outright package of billions of rupees. The out went government had never even dreamt, had not seen R&D will be so much attractive to take shape of never ending sort. If memory is working six percent to three percent or like amount was provided to improve forex earning and be just a matter of past.
But it was not to happen as the authorities in the previous government had thought, the voice would not follow, rather exports will be made a matter of life and death. The exports have not reached the size of target $14 billion or like amount but various demands in different shapes continued to trumpet high in the atmosphere.
Sometime back gas and oil rates rise was exceptionally hurting experience and to some ST was a block in smother exports. The apparel forum, which has never claimed to have done booming business but had often contested, given patronage and facilitating where requisite, they were not lagging far behind with other textile products.
Their claim to fetch most per unit indeed was very true. Now that lately come in the picture apparel forum requisition to exempt ST from packing material of textile sector could be favourably considered subject to authorities thinking in similar veins. Their claim the authorities must be aware of is that their cost of doing business has gone 12 percent high as their claim compared with other countries exporting similar products.
WILL POOR GAIN FROM WTO?
The apprehensions that were expressed that rich will show they are trying to squeeze out as much riches as possible but then they will stop that to press poor through emerging developing countries to force more ground ultimately. Before July 2008 meeting actually had opened on its eve much hope was being expressed that a deal was on the anvil. Those who had reservations however, stuck to their stance rich can part anything as a "charity" and not as shares two partners part with.
The world population or countries were bisected in three major segments - developed countries, emerging developing countries and Least Developed countries. The least developed few countries were ultimately to make escape goat at the final end saying poor will lose much by ignoring deal than the rich.
Quite true, rich has not one way to cover through science, education, natural resources, information technology and correct understanding of the problems and means to get at them.
Poor has nothing except raw material, which is that for rich philanthropists chalked out so big looking a thing like WTO. The raw goods rich buy at one or two cents sell after adding value to then one dollar / on pound sterling, in doubt why they have ruled a number of world scale organisations in the way they wanted claiming as the leader of democracy.
Quite a few years back Brazil was moved giving it a status of emerging developing country, through India with same status was kept in reserve. China is leader among the developing countries she was put at the sidelines understanding China won't be easy job to bring it to their toes. The yuan, the Chinese currency, which has been a headache to so-called developed countries, gave insight for thrashing out bunchy matter.
China is a different sort. However, it was very much in sight to sources, who often had indicated India may ultimately considered to come to terms because WTO was supposed to have huge offers in its coffers. The headline vibrated relief as it said on front page on July 1, 2008, "India willing to rejoin WTO talks but won't compromise on farmers who every day die in that country despite nice cooked food thrown in the backyard of five star hotels world over.
BUYERS HESITANT NATURALLY:
The fact that exporters and manufacturers should mind more for their responsibilities than depending wholesale on government help-be it fabrics or foot, said sources who appreciate exporters genuine problems should be looked into and resolved. But at the same time they think government's coffers are hardly ever have been so full blooded in Pakistan to stay, as such after tax exemption duty cut and favouritism.
The last word embraces everything that has kept projects development a begging. If such is the condition of state, the prevailing self-deception all four sides, sector like exports can flourish is unthinkable. If state sector like business and export form parts of state all equally have to contribute rather than looking for state help day in and day out.
All four will have to change the perception more so as something topsy-turvy seems to have been taken root during the six decades. Unless Pakistanis don't change the perception how can exports products from Pakistan be reasonably priced and readily acceptable?
To the sources, who commented on the state of things above, was no surprise that buyers were full of reservations and particularly they looked at price differently. The exporters of textile products or any products has tacitly named China, India and Bangladesh products can be ordered for X'mas shopping ignoring products worth $78 million whose fate is hanging in balance owing to price, which in the absence of research and development subsidy had lost edge over the regional rivals. The victims have been approaching authorities directly and indirectly, the sources felt they are not able to suggest either way. So, they said they will rather wait and see whether exporters have been favoured.
HACKNEYED DETERMINATION:
Had there been no trade off on revenue collection at least, economy would be booming, and certainly not in so much distress. No trade of like phrases and sentences can be found littered in newspapers but those who really felt such favours were running this eternally poor country, shape of the country would be different. Very recently federal finance minister sounded the feeling much to the disgust, rather than cheering, the sources close to textile trade commented on the report, which carries whit it the heart throbs of Pakistan who have sacrificed, willy-nilly though, development projects, health, education and two square meals for liberal trade-offs.
Much can be salvaged, if even right now down what is said. The time has come to such a passe, a hard working farmer Nawab Khalid with tears in his eyes said government has always been behaving like a silent spectator in recent case of hoarding of sugar, wheat, pesticides or fertiliser loud action was announced but nothing came to surface".
During 2007-08 season mealy bug attack was reported, while the pesticides were either not on offer or it that were 10 to 100 times cost - sources reminded. And the fellow who wanted to produce the drug locally was shuddered to see the way available drugs were treated. The textile products are getting dearer in foreign markets. Even friends like European Union and the US have been keeping their importers away.
The recent PM visit - was expected to produce a lot of goodwill and investment and FTAs etc but what is being received from those was all sorts of misgiving and indication of undesirable stuff. May be PM has to announce what has not been coming during his absence. But reports, one such quoted above, await for solution on his return. May be the tons of textile products stated sometime back to be stuck up have been accepted by importers and money paid.