Trading in cotton improved naturally because cotton production was expected in bumper shape, on the other hand manufacturers and exporters of textiles were preparing for rise in exports quantitatively. The spot rate was down by Rs 25 to Rs 3425 but raised to Rs 3450 on closing day.
INTERNATIONAL SCENARIO:
Even the most experienced players got surprised to see Monday trading slightly firmer while they were openly talking about contracts to gain with higher margin. However, they consoled themselves saying it was technical outcome. In fact in the absence of fundamental factors, China for example had offered widespread ravenousness over big losses.
On report of fed chief Ben Bernanke and others the cotton traders are linking demand will continue to depend on betterment of the global economic shape. Outside market oil has no respite so the most grain and bulging stocks. All combined December at 58 cents players were not consoled. China is still comparatively quiet owing to which the level is being accepted while oil, stocks, major grains are holding resistance in the contract at 58.75 and 59.60 with support seen at 57.90 and 57 cents at the worst.
The futures were subservient to investors and technically investor sales. But most traders were not ready to look back, expecting futures should get support to firm up. The oil rather topsy turvy move economic uncertainties and firmer dollar, again in the absence of cotton own strength pushed for sales dragging cotton futures down.
Uncertainty is one thing abhorred by cotton traders most which they are faced with currently. The wait since opening of the week of jump in cotton came towards the end supported by gold, oil and firmer grain and falling dollar value. The weekend sales and shipments of cotton too aided the jump in cotton.
On Thursday, the NY cotton futures closed higher on trade buying and investor short-covering as the market staged a modest rebound after sinking to its lowest level in two months, analysts said.
The December cotton contract in New York rose 0.17 cent to end at 57.64 cents per lb, dealing from 57 to 57.94 cents. Volume in the December contract was at 4,105 lots at 2:38 pm EDT (1838 GMT). March cotton added 0.08 cent to finish at 59.96 cents. On Friday New York cotton futures banked on late short-covering to end higher as the market extended its rebound after easing to a two-month low this week.
The December cotton contract in New York rose 0.70 cent to conclude at 58.34 cents per lb, dealing from 57.59 to 58.89 cents. Volume in the December contract was at 4,462 lots at 2:34 pm EDT (1834 GMT).
March cotton increased 0.73 cent to finish at 60.69 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said investor short-covering as players evened up their positions along with possible mill fixation buying gave cotton a late boost.
But analysts feel another probe of lower ground is likely. "I still think we need to look at 55, 56 cents (basis December)," Johnson said. The next move of cotton remains dependent to a large degree on the performance of outside markets, so fibre contracts remain vulnerable to setbacks going into next week, she added.
"Prices are expected to follow trends in outside markets until some news appears to affect cotton in a big way," said Jack Scoville, analyst for brokers The Price Futures Group in Chicago, in a daily commentary.
The market will also be monitoring the pace of buying by top consumer China going forward. After the US Labour Day holiday on September 7, the market will be turning its attention to the monthly supply/demand report from the US Agriculture Department on September 11. Total cotton volume on Thursday reached 4,883 lots, from the previous 10,075 lots, exchange data showed. Open interest in the cotton market hit 123,325 lots as of August 27, from the previous 123,276 lots, ICE Futures US said.
LOCAL TRADING:
The opening session on cotton market witnessed nearly panic buying, for strangely the ginners slashed spot rate by Rs 25 sending message through the market phutti arrival is faster then expected and prices were likely to go down. Over 10000 bales of cotton changed hands at price between Rs 3425 and Rs 3525. Phutti prices ruled at Rs 1700 and Rs 1725 in Sindh while in Punjab phutti had registered rise of Rs 25 to Rs 1725 and Rs 1750.
The ginners rightly thought to sell cotton stocks instead of dumping and piling up. The millers were also anticipating better textile exports owing to what textile policy was to deliver than. On Tuesday mills found themselves heavily engaged in cotton forward buying to cover short position Eid holidays in view. The ginners were said to be pretty nervous considering good cotton yield forcing them to take stocks into market which consumers lifted quickly. Phutti prices in Sindh and Punjab stuck up at Rs 1725 and Rs 1750, spot was unchanged and nearly 11,000 bales of cotton changed hands at prices between Rs 3425 and Rs 3500.
On Wednesday prices were seen edging slightly higher as the recent large buying prompted ginners to take advantage of. The ginners, however, may have been looking for some other cause which consumers are not aware of. Only the streaming phutti from the field is on the back of selling by ginners and buying by the millers. Above 14,000 bales changed hands in prices ranging between Rs 3475 and Rs 3525 per maund. Phutti prices remained unchanged at Rs 1700 and Rs 1725. Spot rate remained stuck up at Rs 3425.
On Thursday there was no let up in buying as consumers lifted over 7000 bales of cotton at prices between Rs 3375 and Rs 3500. Phutti prices were same in Sindh and Punjab that is Rs 1700 and Rs 1725. Spot rate was put at Rs 3425.
On Friday the official spot rate was unchanged at Rs 3425, they said. In the ready business rates depicted no change as about 11000 bales changed hands between Rs 3425-3500. Phutti prices in Sindh and Punjab were same at Rs 1700-1725.
Some brokers said the grower' strategy worked as prices maintain a firm posture despite increased arrivals. They said that growers were trying to raise prices by creating artificial shortage in the market and it looks this factor is materialising as the rates are not travelling in the negative territory, instead retaining the present levels. Beside, other version is behind the firmness in the rates described that ginners have sold stock, which was for the purpose of future dealing.
This factor may be a reason behind the steadier prices and likely to push prices higher in the coming days, cotton analysts guessed. On Saturday tight supply helped the prices to keep firmness. The official spot rate was up by Rs 25 at Rs 3450, they said. In the ready business rates moved up slightly as about 9000 bales changed hands between Rs 3450-3550. Phutti prices in Sindh were same at Rs 1750-1775 and in Punjab, the rates were higher at Rs 1750-1800. Aggressive buying was seen by the spinners as they were bound to meet the export orders. In the meantime mills were also active in forward purchasing.
BT COTTON AND ORD:
If Bt cotton production in Pakistan had waited for so long that an ordinance will do the job, this could have been applied even before. But nearly four years the country was made poorer by dollar one billion annually, interested quarters know well. Every three/four years efforts are made to create dirt-free cotton culture, why not ordinance is promulgated should also be asked from interested quarters.
Import culture is so strong in this country that textile exports often suffer from high cost of doing business, presently it is most frequent talked problem. If not all impossible hitch is in the way, ordinance should also be promulgated to ensure get textile machinery manufactured inside country. So also most needed ingredients by the textile manufacturers and exporters, dyes and chemicals are also manufactured within country so that tons of dollars could be saved on imports annually.
For Bt cotton only four to five years delay have been made, but for dyes chemicals and machinery the authorities have been quite knowing fully well why textile exports have lost edge in foreign countries. But another bit to wake up authorities to save textile exports seen bound to fail and silence seems the fate. Bt cotton Ord will eagerly be awaited.
FASHION, DESIGN NEED OF HOUR:
The realisation should be appreciated as one can hope things are in offing. But should it not have come during long 60 years, we being ourselves cotton producers of high quality and surplus for exports. There are many things being hotly seen for correction and building. While competitors are well entrenched into foreign markets, we are found lamenting about high cost of doing business. The top leaders are approaching large market for allowing access of textile products not without the high cost paid against the obligation.
The country gifted by good cotton and surplus, too, depended for decades on production of yarn, low count. The early thinkers who called the capital or gave repeated wake up call, for turning to value addition were disdainfully singly ignored. Countries which produced value added goods like home textile and garment etc, gave yarn producing machine to Pak enthusiasts, who kept new and innovative people coming to field away.
Resultantly there are number of innovations and fashions made by our competitors while we have only lately realised the need, when it will be given shape and existence is known to enthusiasts. While the competitors have every things required to push textile products anywhere on earth where they are embraced for quality, fashion and design thinking has just started in here.
Perhaps, the "brand" was also used in the report which actually calls buyers loudly.
CLCV VIRUS SEEN:
Unfortunately farmers in this land comprised of three categories - the third and last one are actually those who work for bigger ones who pay them the way others are paid. The last being mentioned needs more than advice - or the owners of the lands should be reached. Once again farmers have been urged to take prompt action against CLCV Virus likely to have been observed is advised with one pleasant addition that the farmers should perform with the consultation of local Agri experts.
The pest and viruses are meant for crops to destroy them while growers primarily should watch and detect and call for help from agri experts. In this report once again the agriculture deptt pointed out the CLCV attack has been witnessed in some cotton growing areas - instead of "some" the experts should have named spots covering vast crop areas assigned the work of farmers.
Farmers fully know, crops in the field can enable them to feed - the family minus health, education and a roof. The vague items, without even the name of agri experts without specific areas, harms growers while other interested quarters take full advantage of such reports who raise prices.
Fortunately, lately phutti arrivals are seen with unusual pace, showing prices easing and ginners putting cotton stocks on sale. This has sent message to consumers - millers and exporters of cotton to tighten belt and buy to their heart's content. Last week daily sales lifted by textile exporters showed 8000 to 11000 bales.
The manufactures and exporters must have been feeling comfortable who are expecting textile policy released the other day may be implemented offering them exports offer. The reports should guide and give relief to growers but they must be helped materially.