The cotton buying and prices both went on relentless rampage during the week thwarted by reports telling a bumper crop was due and next moment wronged with spot rate rising from Rs 4100 t0 Rs 4125. Lint prices hit the record high at Rs 4300. Seed cotton at Rs 2050-2200 in Sindh and Rs 2100-2250 in Punjab.
INTERNATIONAL SCENARIO The cotton futures have peaked at 71 plus cents from 50 cents three weeks back. The WTO in effect, without a final deal reached between all the prospective and intending countries. The so-called subsidies have pressed for rethinking to continue to use the traditional high acreage. No, they thought will not be possible as there were countries and cotton growers in poor countries showed their teeth determined to resist protectionism with added backing of WTO.
The funds are interested in attempt buying cotton expecting short availability with the passage of time. Meanwhile, trade waited for weekly export sales report which was likely sometime as Thanksgiving Day closure delayed release of the same.
The growers in African countries disappointed over silence of rich countries moved to place where they can earn better than cotton used to support. Besides the US, India and China have been in limelight - traditional bulk supplier America to China has recoiled leaving India to some extent replace rivals with the help of windfall provided by Bt cotton.
Pakistan cotton report has been hazy made more fabulous by cotton exporters entry into the market without least mercy despite hue and cry by spinners and textile manufacturers - already facing high cost of doing business. Lately weak dollar boosted buyers to be in the market with Thursday closure on account of Thanks Giving Day. The venture boosted March contract to 75 cents, though speculative sales pulled contract down to 74.48 cents. China put on sale cotton to depress cotton price strangely players observed deliveries in December was not seen. The major players will now be watching USDA report China cotton crop down by 1.2 million tonnes. But more important was holidays and aftermath, they said.
On Monday the NY cotton futures closed higher on investor buying sparked by a weak dollar, but below peaks following a bout of speculative sales as this holiday-shortened week began.
The benchmark March cotton contract added 0.44 cent to close at 74.48 cents per lb, moving between 74.15 and 75.67 cents, the highest intra-day level on the second position daily charts since the end of June 2008. March contract volume reached 11,003 lots at 2:34pm. EST (1934 GMT). The cotton market will be shut Thursday for Thanksgiving Day and Friday's session end shut early.
On Tuesday the NY cotton futures closed near a 17-month peak on investment fund buying inspired by a rally in China's fibre futures as it bucked quiet business in other markets before a holiday weekend.
The benchmark March cotton contract sprang up 1.04 cents to conclude at 75.52 cents per lb, near the top of its 74.38 to 75.54 cents. It was the highest close on a spot basis since the end of June 2008. The trading range was an inside day though as it was within Monday's 74.15 to 75.67 cents band. March contract volume reached 8,126 lots at 2:37pm. EST (1937 GMT).
On Wednesday the NY cotton futures closed lower on investor sales, but the market is seen pushing higher after a holiday break because of investment fund interest in fibre contracts.
The benchmark March cotton contract declined 0.30 cent to conclude at 75.22 cents per lb, moving from 74.64 to 75.74 cents. March contract volume reached 6,248 lots at 2:37pm. EST (1937 GMT).
LOCAL TRADING Trading in cotton subsided ahead of the Eid-ul-Azah owing to transport problem besides cotton consumers waited for the prices to come down. Early in the week both the exporters and textile manufacturers and exporters lifted lint available. But lost space and speed as transports were engaged for transporting sacrificial to far and near markets. The official spot rate opened at Rs 4100. The buyers lifted some 22,000 bales of cotton in price ranging between Rs 4027 and Rs 4200 per maund. The normal buying activity was expected to resume when transports would be available after holidays.
On Tuesday only 8000 bales were sold in prices done on Monday. Meanwhile, the textile ministry is active and doing everything to solve the problems of the textile exporters. Besides looking for electricity and gas availability, efforts to somehow check the outflow of cotton yarn which is additionally taking away the edge in foreign market. The phutti in Sindh and Karachi was being sold to Rs 2000 and Rs 2150. The friends who are keeping in view the fight against the terrorism have been considering ways to help by way of BIT and easy access to products in their markets. The central bank is also in its bid to help exports cutting rate.
On Wednesday cotton prices were moved higher on expectation that consumer cotton buying will soar after Eid holiday as a result 8000 bales of cotton changed hands in (higher) price range of Rs 4100 an Rs 4250 per maund. Phutti was raised of Rs 50 in Sindh to Rs 2050 and Rs 2200 and in Punjab rose by Rs 100 to Rs 2100 an Rs 2250. Market operators were expecting foreign buyers to enter market after holidays that will indeed keep the spinners and textile manufacturers pretty worried. India is approached by needy asking cotton while China is busy buying yarn form Pakistan.
On Thursday record Rs 4300 high was noted lint prices on the market, the volume therefore naturally came down to just 4000 bales per maund in price range of Rs 4150 and Rs 4300, the record. Price apart volume has gone down also because of transportation problem. Phutti prices in Sindh ruled between Rs 2050 and Rs 2200 while in Punjab ruled between Rs 2100 and Rs 2250. The reduced production in some countries has turned cotton buyers towards Pakistan, ginners thus holding back stocks to reap more harvest.
TEXTILE FACILITATION CENTRE Among a host of projects being planned in this country, textile facilitation centre is technology upgradation of the traditional textile products manufactured in Matta Mughal Khel in Shabqadar, Charsadda. A word of appreciation is because, God bless, the centre for provision of washing, dying and pressing facilities for traditional Chaddar manufacturing textile sector has already being functional. The problems manufacturing were facing apart, now facility would now be available to the stake-holders of the cluster at door step of the manufacturers.
The operation at the facility would bring revolution in facilitation of the sector. An average of 500 Chaddars would be washed dyed and pressed in one day and a minimum number of 14,200 in a month, Matta Mughal Khel is a back ward are of the underdeveloped district of Charsadda where majority of the people live below poverty line. The project would gear up economic activities, improve the living standard of the locals and build confidence of the investors.
Indeed, whoever conceived the idea can foresee things in future. Besides the textile exporters of Faisalabad and Karachi, like the manufacturers of traditionally Chaddars will benefit from US help forthcoming shortly in the shape of opportunity zone.
The attitude of the Pak textile exporters is not understandable why they are allergic to push products into India, despite, in the words of an Indian minister was all praise for quality of textile products. He referred by the way about the traditional Khadar products. The Charsadda Chaddar may penetrate into Indian markets provided exports act in business like manner!
TRRR=P The prayers of textile manufacturers and product exporters' have been listened and one could reasonably expect SBP will start paying remaining 60 percent pending R&D claims. The SBP had announced the other day that it would pay the outstanding dues on account of R&D for the last 17 months.
According report the finance ministry had already released Rs 5 billion for payment to the central bank. For the remaining left over the central bank was waiting for the ministry of textile directive and mode of payment. If dues are paid promptly textile exporters were optimistic X'mas orders of the US and EU markets will be met. The importers of the two countries have warned orders reach promptly. While exporters with encouraging number of stocks in hand here are faced with several problems, the warning hanging like sword of Damocles.
Pak exporters according to report stress particularly has been on the distress calls of the apparel sector, that finance and textile ministries have agreed and asked SBP to release claims of 60 pc payment stuck up for certain reason. For reputation fear all the terms and conditions are not being given but suffice it will be to caution all claimants to submit proof to enable bank to release the money.
Good news in connection with easing of import rules have recently been coming from the US and the EU. The messages are, however, quite vague and hazy, but taking the outstanding relations textile exporters will not be disappointed that positive delivery is in the offing. If all is well at the home front, worse latest being the yarn skyrocketing price, textile exports will prove its worth.
COTTON YARN EXPORT The cotton yarn export registration henceforth, has been desired by the Cabinet meeting on textile. This perhaps has been required to keep a check on unbridled exports of cotton yarn, as desired by the textile exporters particularly the sectors adding value in their products.
What and how authorities intend to do is not clear. The committee decision came after weeks of protest over yarn exports which not only making difficult its availability, but prices were skyrocketing. The textile ministry's taking serious note of the export is praise worthy, but under the free trade practices in the county how can the check be made effective?. The victims must have been praying some way would be found out to ensure availability of yarn, sources close to cotton and textile said, adding that manufacturers of made-ups have voiced non availability of cotton after gap of quite sometime.
The meeting also discussed five-year textile policy implementation attended among other by Finance Minister Shaukat Tarin. The details interested quarters would have liked to hear was probably kept back for another meeting expected after 15 days understandably to review the situation. The meetings particularly held by textile ministry or the stakeholders hardly touch whether textile machinery is being produced in the country, and if so, why tons of dollar are annually drained out on imports of "new" textile machinery. Or the question of making infiltration free cotton a culture is also ignored every time.
How easily Pakistan submits to the whims of cotton importers who deduct billions on lingering misconception that cotton this country grows does not bear international quality. There are in our neighbours beyond India that cotton is sought with keen interest. The recent trend in Pak exports shows how buyers in BD, Malaysia and Indonesia and beyond regarded. There is perhaps need to respect our products and ourselves.
BILATERAL INVESTMENT TREATY The report speaks that Pakistan and Germany have broken new ground by signing enhanced version of BIT (bilateral investment treaty). The details what it would be and benefit the two, particularly this impoverish country, will be written on the horizon early next month when modalities will be finalised during PM's visit to that country.
The report inches ahead with more optimistic that five German Companies have shown interest in investing in Pakistan but it said it was quite immature about their priority sectors.
A number of similar good news Pakistanis see floating into thin air and hoping they would materialise. The warmth however is hardly every found forth coming by icons of this country. The result is that this impoverished country, according to sources close to trade and investment, has hardly stirred stronger countries to show interest unless they feel they have to appease this country. The point the sources said that the stronger economically world has learnt Pakistan can be an ally in this hour when the world is surrounded by terrorists. After futile loss of golden decades Pakistanis have not learnt how to make friends in need. China has proved what good it can do to this country but trade and businesses are myopic, according to sources.
However, in the coming days it will prove that EU, US, Germany had a feeling to make this country strong if they feel Pakistanis have always stood by them in their hour of needs, sources reminded. In the meantime let nation weigh and try to reach what democracy has gifted to it-, they concluded.