Nose-diving of spot rate and prices were hallmark of trading in cotton during which nearly 50,000 bales changed hands during the post Eid holiday session. The spot rate went down by Rs 325 during the week ending October 11, 2008,settling at Rs 3475.
WORLD SCENARIO:
Hope and fear ruling NYCE markets propelled by melt down prompted investors to liquidate pulling contracts south, players said. The December cotton dropped three cents limit to end at 54.41 cents a pound on Monday. The opening session unable to shed that goings in major trading and banking plummeted as investors fund sales added to woes.
The expressed belief that cotton was likely to suffer because of the financial crisis overtaking the major world markets. Analysts believed that US congress approval of $700 billion may temporarily stabilise financial markets but the turmoil sparked by toxic debt will stay for some time to come.
On Tuesday too, investor's liquidation was responsible to down drift. Even taking immediate prospect was doubtful as cotton today takes queue from other commodities, which are in spin, players said. They said bail package may turn some corner but was not likely mend. The reminded factor weighing on cotton is how badly demand would be hit by the world worst financial crisis since the Grate Depression in 1929.
On Wednesday against the hope and perverting trend, the futures mainly backed by other crops like corn, wheat, soybeans etc which, recorded a rise. However, the following day futures took to size and declined as investor sales demoralised and the worst financial crisis seen in last 80 years. The players found weekly export sales of much of any inspiration. They derived some satisfaction from businesses picking up from lows. The market was looking for supply/demand report in a few hours time.
On Friday the down drift persisted due to selling spree coming in the wake of bearish supply/demand report. The December cotton dropped 3 cents to 49.44 cents.
LOCAL TRADING:
Post Eid trading on the cotton market proved brisk as more or less 20,000 bales of cotton changed band, covering the shortfall seen before Eid holidays. The pace in trading a part spot rate was reduced by Rs 100 showing the easing trend. The cotton consumers, who had restrained by during Pre-Eid days were more than compensated by nearly lifting every available lot.
The wait for the ginners report was too much as the price could rise, subject to production and crop report. Phutti price also fell sharply in Sindh by Rs 75 to Rs 1775, while in Punjab sharper losses were marked where the loss was from Rs 50/ to Rs 100 to Rs 1650/1700 (per 40 Kg). The traders reported sharper recession in recent days. Totalling Rs 600 around a fortnight.
On Tuesday further slide rather sharply was marked encouraging buyers to lift to their heart's content. Phutti prices in Sindh was quoted down at Rs 1600 and in Punjab at Rs 1550/1650.
The traders expressed concern at the losses suffered by the lint, which they said emanated from uncertainties whether world leaders offering packages to restore banks, share markets, mortgage business on the downward drift. Any way, PCGA fortnightly report up to October 1, showed 2.3 million bales of cotton arrived at the ginneries, against last year's 1.8 million bales.
On Wednesday lint spot rate was downed further by Rs 150 to Rs 3550 at one stretch while asking prices in ready went down to Rs 3200. The PCGA report which, make buyers wary who tempt sellers and even press when sure production and supply pace was bound to drag prices down. Millers and a few exporters were present and covering per their need and orders in hand. Around 10000 bales were lifted.
On Thursday bearish trend persisted on the cotton market as spot rate continued slide due to good production during the current season, dealers said. The official spot rate fall was extended lowering by Rs 75 at Rs 3475 as ginners were ready to dispose off the unsold stock, they said. Phutti prices were higher in Sindh at Rs 1750-1850 and in Punjab the rates were at 1550-1700, (per 40 kg).
Apart from mills' buying, exporters were prominent by taking part in fresh buying due to higher dollar rates. In the meantime, the growers were major losers under the circumstances as they have invested heavily during the process of sowing, cotton analysts said.
Abouy 14000 bales changed hands within the price range of Rs4475-3500. On Friday spot rate resisted downward swing as consumers lifted around 7000 bales at favourable rates ranging between Rs 3450/3500. Phutti prices under smooth supply position shed ruling at Rs 1700/1750 in Sindh and in Punjab at RS 1600 to Rs 1700 (per 40 Kg). The buying was restrained as ginners abhorred decline and waited lest there scenario change.
On Saturday Official spot rate was unchanged at Rs 3475. Phutti prices were lower in Sindh at Rs 1650-1750 and in Punjab the rates were inert at 1600-1700, (per 40 kg). In ready business some 13000 bales changed hands within the price range of Rs 3400-3550.
TXTILE EXPORTS TO US:
The textile products are constantly on a decline for months and exporters have not kept it a secret why? They allege government is responsible for every now and then rise in utility rates, besides oil hike that come in the wake of imbalance in trade and exports of nation, extra ordinary fluctuations in currencies.
In Pakistan's manufacturing and exports constraints are perennial, in case of the US is different, it loses balance but soon overcome the difficulties through various means that is indigenous. The exporters of textile particularly were looking hopefully president's maiden visit to that country in this position. At the end of the visit hopes had shattered leading to release of discouraging report of 30 pc fall in exports to US only. The troika from the EU was here a fortnight who was approached in pleading tone rescue Pak exports from sinking and economy as a result. A grim silence had followed the pleas and new conditions are bound to deteriorate in case of other country-the size of EU.
Since disappointment is thorough, the exporters in utter disgust have sought a policy guiding exports be released. In fact exporters have regretted it should have been released furnishing the ways to meet the challenges through from all four sides. As usual they have not made any reference the lingering and continuously ignored weaknesses since 1947, which has made Pakistan import house of the producer nations.
How disgusting is, under all these dismal developments that some wise men have been talking about "Sanctions." It is the same issue, which had been securing finance in the name of fighting terrorists along side the Western long standing friends. This could never be imagined rather than talking if the country had not been in severe financial crunch and rupee was losing its value against dollar with each passing day, foreign exchange reserves are also depleting rapidly."
A leading textile exporter Ijaz Khokhar reportedly cast doubts over sincerity of newly elected government saying that since it has taken over the office failed to improve the country's economy, whereas it is still relying on foreign financial aid mainly from world financial institutions and the US."
RESERVATIONS IN TRADE:
Unless country's potential has been mercilessly misused, allowed to be misappropriated why Pakistan has come to this passe? Those who know well they are not in a position to correct all the accumulated wrongs. Dr Murtaza Mughal, president of Pakistan Economy Watch (PEW) rightly observes "we have missed many opportunities in the past." Although he made this comment in a different context but the sources saw in the light of this country always living in hard time.
Business has not been flourishing, exports have not been like engine ever lead this country towards economic goals and prosperity. Aid has come from time to time, which turns into charity. The demand from trade has always been hurled but in low voices easily ignored by friends and as easily forgotten by callers. Not that such enlightenment had not been placed by secretary's and advisers to the leadership if 500 million people living below poverty line (Pakistan inclusive).
The situation he sees can end only if the region could grow at the rate of 8 percent. He suggests the growth rate could only be achieved if enhanced trade is made possible, which he sees in Pakistan and India have a leading role in regional grouping and two countries can ensure a good future to masses if show flexibility.
However, for certain valid reason flexibility has remained restricted. In a recent TV channel talk Salman Shah was critical that showing the world that every thing was bad can hardly induce investors to pour money in Pakistan. The textile sector is in utter distress. The exports of ready made garment, which earns 10 time more per unit compared with other textile and yarn showed sharp decline. In fact for quite a few factors the textile exports have been falling continually.
The government is not expected to do away with the problems but should prepare show that all is set. The too much dependence on friends of Pakistan should be avoided. Belts should be tightened and efforts afresh should be made to achieve self-sufficiency in every field so that billion of dollars are saved from importing toys to machinery.