Cautious buying and selling were observed on the cotton market, as both the buyers and sellers keenly watched the developments in the world and local markets. The sellers however gave in to widely visible shape and cut spot rate by Rs 50 to Rs 3350.
WORLD SCENARIO:
The futures on the NYCE were down at two- month low when cotton market opened on Tuesday after a day's closure on Monday. The Chinese millers buying have tilted hope of cotton may be pushed up at certain stage. The general view is keeping farmers on the backyard who are likely to harvest cotton on smaller land - 8 to 9 million acres. China seems to have reduced millers to look for cotton outside china, which local cotton was bought by the government at higher prices so that farmers remain interested in cultivation. Cotton availability in Australia will supply to needs world over.
On Wednesday the futures stayed vulnerable despite trading reversed on the higher side in an attempt to correct the losses sustained on the previous day. It may be recalled that US cotton futures on Tuesday had hit two-month low. May cotton was up 0.25 cents to 44.93 cents a pound. Seasonal pressure amid weakness in demand as market participants rolled positions out of March contract into May ahead of the spot month's first notice day on March 2, 2009.
On Thursday futures were down modestly rejecting rise in commodities. Players were watching cotton following the stock market as that was considered as reflection on the recession hit economy more than anything else. The March cotton was down 0-47 cent to 43.42 cent a pound. On Friday's early trading May cotton was down 0.71 cent to 44.20 by 11.55 am, said to be so due to strong dollar and commodities sell of other than gold.
LOCAL TRADING:
The cotton consumers stayed mostly on the sidelines sending resultantly prices reeling in early trading also under impact of world economic meltdown reports. The sellers were not ready initially to how to the developing situation, but resistance collapsed on the very second day, when spot rate was cut by Rs 50 to Rs 3350 while low buying remained visible -just 3000 bales on Monday. Spot rate stayed put at Rs 3400 as sellers were not ready to accept the way world prices were signalling. The phutti prices too had dived down ruling between Rs 1600 and Rs 1700 both in Sindh and Punjab.
The next trading day on Tuesday knocked the sellers perception who cut spot rate substantially by Rs 50 to Rs 3350. The phutti rate sustained at Rs 1600 and Rs 1700 while asking maximum price in ready was Rs 3375. The consumers and sellers had been well aware of the world trend visa vis cotton and overall economic plight and hence the sales and buying were subject to reports they were suggesting action. The slashing in spot rate encouraged buyers to put further pressure on sellers thus only nearly 3000 bales of cotton was marked.
On Wednesday more or less 9000 bales of cotton changed hands showing buying pace not picking up. The PCGA report arrivals up to February 15, 2009, at 11.13 million bales said to be short, cautioning buyers watching, which way winds blow. The buyers wait has been quite long and they were likely to wait no more. However, Thursday's session will speak much about shape of things to come. In the meantime spot rate, phutti prices and prices in ready stayed at previous day's level.
On Thursday in ready off take Rs 3100 ruled though only nearly 500 bales changed hands. The cotton buyers were expecting lower rate by ginners but sellers were eyeing on higher prices. The latest arrival figures quoted lower arrival. However, on the day the spot price and phutti rates remained unchanged.
On Friday trading in cotton improved giving a push to prices. About 8000 bales of cotton changed hands in price range of Rs 3150 and highest Rs 3400. The spot rate was put at Rs 3350 while phutti prices ruled in Punjab and Sindh at Rs 1600/1700. The currencies disparity such as in Pak rupee and dollar giving textile exporters hope.
On Saturday the official spot rate was unmoved at Rs 3350. The phutti prices in both the Punjab and Sindh were unchanged at Rs 1600-1700. In the ready business, highest rate was at Rs 3325.
According to the market sources, activity was thin, as Indian cotton buying was more attractive for the local buyers due to lower prices. In the meantime, spinners were away from the market because of financial problem and hovering fears about the world recession.
EXPORTERS, GOVT JOINT EFFORTS TO IMPROVE EXPORTS:
The worried authorities owing to world economic scenario and hue and cry by exporters that exports going down, came up with assurance that assured R&D claim that exporters were advancing, will get in due course. They however were cautious whether R&D will continue in future. In a latest report the textile minister had hinted that if the textile sector got boost, the country's exports reach around $30 billion to $40 billion annually.
The amount hinted was quite optimistic, more than double of the present size. The textile minister is rightly over optimistic about great role the textile exports could play in running the Pak economy. The textile sector has always made such claims that it was singly contributing about 60 percent of exports earning and employed over 40 per cent of labour force. The minister is seemingly aware that country's textile sector depends on imports of every textile products are result of such as textile machinery in the absence of any locally chemicals, dyes and even cotton adding to a new face coined like high cost of doing business.
The knowledgeable sources close to cotton and textile sectors said authorities should find ways, which could block billions of dollars drained out annually mostly from India and China whose produce compete with Pak products. Oft quoted rivals China and India have saved their units from vulnerability by making most need available locally. Sources hoped authorities having overcome the above can be sure they won't have ever to say "there is nothing in government kitty!
RUSSIA IS LARGE MARKET:
The Russian market with $470 billion forex reserves is being focused to increase Pakistan's market share. It sounds pretty good and like opening an opportunity to avail at the first instance. So far only United State and the European Union markets have hit the idea. Against this China has stepped into every big or small opportunities to turn into an economic viable country.
Where stands Pakistan today. If proved penetratingly successful the TDAP has invited a high level buying mission comprising top importers and decision makers dealing in major textile products. The successful end is prayed as textile products have no particular season, but of course, Russians are as careful to enter a competitive market.
Long before authorities were trying textile exporters open eyes and see market in Africa, Russia, South America and even China. Many will wonder to hear China's name, which itself has taken very much of the planet but don't wonder look to fact and events, which have people turn blind. When as usual Pak exporters were making sky fall on high cost of doing business Chinese teams would extend hand of friendship to help them in sales.
How, that could never be found because they received no response. Yes, the world knows the Chinese exporters have learnt the magic to sell products in places they are sought - may that be in America, Europe, or little known places in Africa and Latin America.
May be some will bear me out, not long before a textile exporters himself signalled fellow travellers in Pakistan to invade Ukraine where he had seen good opening but was there any response even to this call by a Pakistani in Ukraine. The Russian team, with huge market despite recoiled size still offer opportunities to snatch exiting market share. The team will be in Karachi and would like to see Pakistani exporters of bedwear, upholstery, technical textile (synthetic textile) workwear including industrial uniform. In Faisalabad they will be two-day later on February 27, 2009 where exporters of above items have been invited. Of course, the terms and conditions are there and Pakistan have to be well versed.
EU LIKELY TO LIFT ANTI-DUMPING DUTY:
Not many months back had been extensively covered in newspapers here injecting hope that days of smooth bedline exports to European Union are knocking. But the other day similar report with word "likely" appeared, which left many to speculation whether sacrifices Pakistan was making for international peace had fallen on deaf ears.
In going back to great Union of Soviet Socialist Republics (USSR) days when India shook hands with that Union in reaping valuable harvest despite break-up. As compared to this country even the unconcerned countries can gauge that stands no where with never breaking beggars low. Well-placed sources in TDAP of Pakistan revealed that anti-dumping duty was expiring on March 5, 2009. Since there has been no fresh case of familiar complaints by the EU producers, the fine will eventually be lifted. That will mean that annual exports of home-textile products would increase by some $400 to 500 million to EU. The final green signal however is still awaited to make the exports of cotton-bedliner (cotton type), which should by the middle February had been received.
It may be worrisome to note that a lonesome sufferer in the region was Pakistan except Bangladesh by dint of being the LDCs. God bless the anti-dumping is lifted, but it is prayed the EU never again undertake proceedings on complaints from its producers such as one on November 2002. If any country is rightly or not, is so sensitive to nagging from its own producers Pakistani bad-linen exporters should not tempt any country particularly, when global trading has not been as free as being shrewdly tried to convince the developing countries. Annual loss of $400-500 million should be in view which Pak exporters must be vigilant about.
SMEDA TIGHTENS BELT FOR SICK UNITS REVIVAL:
The smeda has planned to help build small and medium businesses, as so called big ones were far from satisfactorily doing for the economy and exchequer of the country. It was a novice and fruitful idea to spread small businesses in the shape of cottage industries in rural areas where skilful people sit idle after completing seasonal jobs, such as growing various crops like wheat, rice sugarcane and cotton in the fields during particular time of the year.
For the sake of making people engaged in handicrafts micro finance was also arranged. Some reports however had said the small and medium sized businesses had not been doing well, at least on export fronts. The small and medium capital possessing people had pinned great hopes, but they were thoroughly disappointed.
Now a report datelined Multan says Smeda is being engaged in altogether different activity of reviving sick units, not in original planned list. The sick units, sources said, have been causing collossal damage to banks and economy wider verities of schemes are being advertised showing lucrative offer by banks. Sources felt country needs small and medium sized industries flourish. If shaped on correct lines there will be no one unemployed in even far flung areas of the country, exports will multiply in manifold, streaming villagers towards cities will contract.
The condition obtaining within country, across borders and world-wide need policies to make country viable and strong to discourage dictations from any quarters.