The cotton buying started on good nod as buyers lay hands on quality lots on back of positive signals from authorities leading to optimises that exporters are hell bent to exploit the potential world markets has despite recession warning. The TCP presence has acted as harbinger of good news with buying as prices show giving way. The spot rate opened the week at Rs 3200 but ended with Rs 100 gains at Rs 3,300.
WORLD SCENARIO:
The cotton futures dropped steeply as investment fund decided to sell despite cut in acreage but signal about demand to keep low. On Monday March contract dropped 2.65 cents to 46.67 cents per pound. May lost value 2.48 cents to 47.37 cents a pound. The recession fear seems to have horrified traders who while cutting acreage low, estimate demand to curtail substantially. America reduced cotton consumption to Rs 115.24 million (480 Lb) from 116.59 million bales. If also saw further weakness in demand import form China coming down to 7.5 million bales from earlier seen at 9.0 million bales.
On Tuesday cotton futures came under pressure from follow through investor sales and as grains reacted badly to the USDA report. The players in the meantime were eyeing on leads from weekly export sales report on Thursday what kind of demand for cotton is emerging despite the global economic slowdown. The lingering pressure from the monthly supply/demand report was also in effect. They said an indicator of demand was china where USDA reduced China's 2008-09 imports. On Wednesday China's awaited import orders and continuing investor sales sent values reeling but residence to hold up despite weakness in other markets traders said was encouraging.
They pointed out the demand has not picked up but confidence in the market is starting to build up. With confidence seeping back into cotton mill demand is starting to show up and ability of the market to stay near 46 cents in March would encourage other mill to step up. The sales during the week as well as shipments were expected to rise leaving behind for better going ahead.
The cotton futures on Thursday, as expected by hopefuls, scored big gain owing change in investment fund buying. They said once the March contract held the low of 45.85 cents, it close over 48 cents if world have the momentum to "move to 50 cents". Traders expressed there was nothing in fundamental behind the rally, but the short-covering also meant it would have the momentum to move to 50 cents.
The weekly cotton export sails were ignored. On Friday futures rose for the second day in a row. The continued interest of fund and trade buying keeping an eye on the trend players forecasting to continue. The Martin Luther King's day closure on Monday will have pent-up buying on Tuesday will prices maintaining firm posture since gains in crop like soyabeans are tempting more us cotton acreage cut is expected.
LOCAL TRADING:
The opening session witnessed around 10,000 bales of cotton changing hand with development that TCP had entered the market to lift 0.1 million bales in fresh effort to keep prices acceptable to sellers and buyers as spot rate and rates in ready stayed stuck up - spot rate at Rs 3200. The cotton buyers, particularly the exporters of textile products were showing caution and lifting only the quality lint.
The best lint offer was fetching at Rs 3400 while lowest was marked at Rs 3125. The spinners were under pressure and had some reservation in going full length. On Tuesday prices sustained firms posture unwary of fact that world cotton was looking south. The official spot rate was unchanged at Rs 3200 and phutti prices in Punjab and Sindh were doing at Rs 1600 and Rs 1750. The traders were looking at TCP tender date which was keeping cotton firm. In fact they said ginners were out for asking raising prices, but was restrained how much the TCP be favourable them. They were pretty worried about quality cotton being lifted at prices could fetch even more.
However, since cotton manufacturers and exporters were in wait how authorities react to their threat of unblock closure of industry unless some solution of their problems are found out. Nearly 12000 bales of cotton changed hands. On Wednesday sharp stretch upward was evident as spot rate was up by Rs 75 to Rs 3275 but in ready prices ruled between Rs 3000 and Rs 3400. Probably leniency was observed looking at the boosted demand for cotton when over 20,000 bales of cotton lifted.
The buyers however were not happy in view of expectation. The sellers were also tracing the govt move that is under pressure to facilitate exports to reach largest at $11 billion.
The cotton crop had weathered possible moment of worries, the continual rains have opened eyes of growers out of anxiety caused by them. The buyers got at the meaning and lifted respectable quantity of cotton - nearly 14000 bales at prices between Rs 3150 and Rs 3400 per maund. Odd time rains spoil quality and drive away the consumers. However buyers have to mind about prices that take a stride. The consumers will also wait for TCP and development from the PCGA report likely shortly.
On Friday consumers laid hands with reservation owing to high prices caused by pressure on millers to stock lifting by TCP without indicating when TCP will stop thinking it had stabilised prices. World cotton rate has been keeping low profile. This fact must be causing heart breaking cotton consumers who are making efforts to regain loses in past weeks. On Saturday some 1000 bales of cotton from Upper Sindh done at Rs 3300, 400 bales from Karor Pakka at Rs 3250, same figure from jalal pur at Rs 3235, 400 bales from Ghazi Ghat at Rs 3400, 600 from Sadiqalibad at Rs 3200 and same number from Burewala t Rs 3000.
DOHA TALKS REVIEW URGED:
The dilly-dallying in signing a final deal in WTO was not without reason - from 2001 to 2009 was too long to give effect. But in one meeting after another and holding conferences in more countries than merely in Geneva were laud enough some wrong has crept in whether for background factor of one or other countries. An organisation, perceived by big brains, understandably to give groaning poor world over relief through global trade, based on justice and fair play should not have taken so long to meet such fate when 152 nation members was nearly sure to a deal before Bush Administration was supposed to go on January 20, 2009.
What nations have gained from the such big plan or have suffered visible or invisible losses in vexing. However, suggestion that review hint should not be taken to be call for suspension is heartening. Susan Schwab, out going US trade chief expressed that now was the time for intense detailed work, which had paid off after other setbacks. Like WTO chief Schwab had not given up hopes saying, talks had seen dramatic intensifications of activity but short of 2009, before which majority was expecting a deal, should be used to step back and see what changes were needed.
Wisely she has tended to assert that I don't think suspension is the answer so much as more of the quiet behind the scene. The delay was felt by all the 152 members but cause that some emerging countries are behind was not openly and finally come but often called for in whispers. The three countries came up so fast, following the fall of Soviet Union was difficult to get at. China, India and Brazil emerged as if they will soon be contesting for being super powers. Hence the outgoing US trade chief once again called for major emerging countries should make bigger contribution to reaching a deal.
TEX EXPORTERS' FEAR:
The textile exporters have been made apprehensive that a $0.5 million loss per month is likely if immediate steps are not taken to rectify the wrong with the power and gas shedding. Initially, with the mention of gas and power it gave as if textile exporters woes have now shifted to gas and power shortages from three to five pc Research and Development R&D over and package to mind textile exports way. But the going through the report until the last words the entire panorama was in full view. Good news is that a high level meeting was to be held shortly.
The meetings, conferences and like things are held and in the past experiences they proved like sitting across over a cup of tea perhaps this was season the textiles relevant leaders would avoid rather attend meetings.
In any case at the very outset the meeting, which is a high level affair should be welcome with Prayer that some ways are being found to rid the people from gas and load shedding which has not only caused unrest among exporters but entire population which not only face dark and dreary night but are forced to buy goods at much higher cost.
The meeting is waited with fond hope, as is shortages the exporters suffer alone but the economy and country. Due to closure on account of Ashura, the off hand knowledge of details of the meeting discussed and decision that were taken. It is expected textile exporters were assured that solution was in the offing, as has been reported on TV channels outages face final death by the end of 2009. The entire 2009 gesticulating and staring more intensely into the impatiently fulfilment of promise.
Meanwhile, in the world of textile manufacturers most of the factories are going to stop operation, as it was difficult to make orders. Exporters are harassed to pay 7.5 pc bank mark up while competitors pay 3 pc, besides China giving 14 pc relate and BD giving 15 pc waiting discount on the purchase of local fabrics. It was pointed out that govt give subsidies on fertiliser but textile is deprived of this facility. Authorities should make room to facilitate textile exporters.
SHOULD PAK TRACE PACKAGES INDIA, CHINA BEING GIVEN?
Other countries, their exporters and manufacturers do not entirely bank on their government to come forward and help. The main industry group US National Cotton Council (NCC), cautioned by economic decadence globally joined heads and decided that three important studies which will be key in its ability to compete in the global economy.
The government in this Islamic country, which has not seen probably a day of health and sound going in over 60 years is looked up for help. Government, as it is always under pressure, due to collection of low revenue owing to few contributing out of nearly 16 crores. The revelation at the recent Belt wide cotton conference. If studies are not conducted and proceeding blindfold industry spokesman said will hurt the competitive position. The Pak manufacturers and exporters have never explored markets offer opportunities except the US and EU.
The Chinese manufacturers and exporters have in depth knowledge of markets and their strength to absorb, and products are produced and exported. Once the Administration and union read imports from certain countries are against interest, they have projectionist steps. The exporters must go for divers markets and finding new ones so that the exports do not come on earth with a thud. And the always short of revenue govt is pestered for such amount to give Pak products an edge over Chinese and Indian products.
The exporters must have army of observers to look at world prospective markets instead of what competitors are provided in the region. The needs as ever are many but prospect remains dull and dreary. Under the world economic scenario neither flow of investors are expected nor it is wise to sell govt properties at throw away prices to pay for demands the sources close to cotton and textile said, adding that there are other ways to try rather than banking on empty coffer.
TRADE DEFICIT SURGES TO $9 BILLION:
The country's trade deficit till writing this review had surged to $9.559 billion, according to FBS (Federal Bureau of Statistics). Country's exports earning was placed at $22 billion. The noted economists had considered the amount over optimistic. Sometime back reports doubted if the target could reach around $20 billion.
Among the export sectors fetching forex, the textile sector claims to contribute around 66 pc of the total contributed by other sector. The textile top leaders are expected to thrash out plethora of odds with the troubled govt and in case of failure to reach any solution, the Aptma Chief was empowered to call for closure of the industry. The decision has been on all Pakistan basis. The meeting was held in Karachi while members from Lahore and Peshawar participated through video conference.
The call for closures, if takes effect is a continued process and sometimes the textile millers received facilities from the govt. that seems far from being sufficient to keep export edge compared with rivals in the region. The textile sectors who have adopted different names to fight their own case since 2005, when quota system was done away with. Seemingly once again Aptma succeeded is assembling battered bodies into one to pressurise govt and making it effective followed by call to stop production and exports obviously. Very lately their fight to have a textile ministry.
Met with fruition. If is now time how ministry manages its responsibility so that its existence is justified. Earlier finance and commerce ministries run affairs of textile sectors. Now ministry must show how it can help both govt and textile industry leaders and sector beat the optimistic target figure.