Trading in cotton dipped considerably owing to rising prices trend, besides Indian restrain to supply Pak importers weeks back signed accord. Spot rate that was at Rs 10,800 was marked at Rs 11,500 on Friday.
WORLD SCENARIO:
The Lunar New Year so vehemently celebrated by China the top cotton producer and buyers seemed little or no effect on the buying. The other crop or commodities affected cotton futures dragging down but over all perception remained that 2011 year will see cotton on the higher side. The recent annual conference in Weltindo saw the trend despite expectation of world production at 12.48 million to 12.53 million acres, a five-year high and increase of around 15 percent. The US was considered as the biggest cotton exporter. China remains the benefactor present season including. But Pakistan has been experienced ugly situation due to India delaying supply of contracted over one million bales.
Whatever efforts by needy and hard hit Pakistan due to great flood last October, India is quite against the agreement. While latest report says from India is that authorities are asking exporters to get new licence. In Pakistan cotton importers hold their breath back.
On Monday the US cotton futures rose more than two percent, as investors continued to price in tighter supply even as a US cotton plantings survey due this week is expected to show farmers intend to raise production. The rally put cotton back within easy reach of the historic, post-US Civil War high hit on Thursday at $1.7283 a lb before, a 2.7 percent pullback on Friday. That did not stop the key March cotton contract on ICE Futures US from rising 3.69 cents to settle at $1.6844 per lb, near the upper end of its $1.6546 to $1.6875 session range. Estimated total volume stood was about 21,800 lots, roughly 15 percent above the 30-day average, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures settled higher for the second day running on speculative buying inspired in part by stronger Chinese prices, with no sign speculative bulls are done rallying fibre contracts. Cotton futures had risen over 22 percent in a fresh rally that began in the middle of January, with Chinese cotton futures matching the rally in the US market. The rally has made cotton the early leader of commodities in the Reuters-Jefferies commodity index in 2011, as it rose almost 20 percent year to date. In 2010, cotton was the best performing commodity, as it went up over 90 percent. The key March cotton contract on ICE Futures US rose 3.78 cents or 2.2 percent to settle at $1.7222 per lb, dealing from $1.6923 to daily limit up at $1.7244. Total volume stood around 26,800 lots, about 40 percent above the 30-day average, Thomson Reuters preliminary data showed.
On Wednesday the US cotton futures jumped for the third straight day, settling up the daily limit, as Asian mills fuelled the rally on average volume. Cotton futures have rallied almost 25 percent since the middle of January, the latest wave of a historic run that began in 2010 and sent cotton prices to their loftiest levels in almost 150 years. The key March cotton contract on ICE Futures US rose the four cent limit to conclude at $1.7622 per lb, with the session low at $1.73. Total volume stood around 20,400 lots, just above the 30-day norm, Thomson Reuters preliminary data showed.
On Thursday the US cotton futures closed sharply lower in volatile trading, as profit taking pulled the market off its latest record high on a day when the ICE Futures US exchange moved to curb speculation. Cotton futures closed with the biggest one-day decline since early December, Thomson Reuters data showed. The market had surged almost 30 percent since the middle of January to the highest level in almost 150 years. The key March cotton contract on ICE Futures US slid 4.36 cents to close at $1.7186 per lb. The price swung wildly from $1.8122, up the Five-cent limit, to $1.7122, down the five-cent limit. Total volume hit 50,500 lots, the most in 2-1/2 months and more than 150 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Friday the US cotton futures finished down the daily limit on follow-through profit taking, as investors took cash off the table after the market's record breaking run this week. Cotton futures had rallied almost 30 percent since the middle of January to trade at its highest level in almost 150 years, but then staged its biggest one-day fall on Thursday in volatile business, Thomson Reuters data showed. Year-to-date, cotton is up almost 20 percent. The key March cotton contract on ICE Futures US dropped the 4.00 cents limit to end at $1.6786 per lb, with the session top at $1.7244. Dspite the steep sell-off of the last two sessions, the market is up 1.9 percent on the week. Total volume hit some 31,000 lots, almost 60 percent above the 30-day norm, Thomson Reuters preliminary data showed.
LOCAL TRADING:
Cotton trading at low level as ginners refused to budge to lower asking price. They being over sure low level of cotton availability, India showing indifference. Spot rate was unchanged at Rs 10,800 and seed cotton in Sindh and Punjab ruling unchanged at Rs 4200 and Rs 5000. Despite widely unwilling, 3000 bales of cotton were done between Rs 10,400 and Rs 11,000. The market noted PM's wish that growers should keep cotton output target at 20 million bales.
On Tuesday buyers could not stay away and bought nearly 30,000 bales despite firm prices between Rs 10,400 and Rs 12,000. Spot rate was unchanged at Rs 10,800. Market sources were surprised at rising trend in prices though China has stopped fresh orders to celebrate Lunar New Year. In Pakistan importers from India were shocked at the negative attitude.
On Wednesday spot rate touched all time high Rs 11,000, as ginners considered to add another Rs 200. It was strange some ginners preferred to offer cotton for sale others held back hoping surge to sustain. Phutti in Sindh and Punjab stayed put at Rs 4200 and Rs 5200. Slight uppish trend was in the market in buying cotton at 12,000 bales ranging prices between Rs 10,200 and Rs 11,500. Indian cotton alone can relax prices if supply is resumed.
On Thursday confusion over contracts whether India is thinking to honour supplies pushed cotton prices further up. The ready off take was marked between Rs 10,400 and Rs 12,500, while phutti in Sindh and Punjab stayed put at Rs 4300 and Rs 5500. Meanwhile, cotton arrival has declined by 11.26 percent due to combined effect of flood, diseases and pest attacks. The PCGA chief has renewed demand for package for ginners hit by floods.
On Friday in response to surge in the ready prices, the Karachi Cotton Association (KCA) raised the spot rate by Rs 500 to Rs 11,500. Phutti prices in Sindh and Punjab were unchanged at Rs 4300-5500. In the ready business trading activity improved as about 8,000 bales of cotton changed hands between Rs 10600-12500. Some brokers said that the prices were higher due to mills' demand but it looks rates may not maintain the present trend and come down following the downward trend in the international market. The local market was also in grip of speculative trade, ahead of long weekend due to Kashmir Day on Saturday.
GINNERS GOT DEFERRED IMMINENT WHT FOR COUPLES OF PROMISES:
The relaxed ginners, who were not entertaining seed cotton from the field for sometime, met with PM and got off with a couple of promises the other day. Naturally worried PM advised team of ginners to use modern technology obviously for nearly doubling cotton output to 20 million bales. The PM in firm tone told ginners if target for producing 20 million bales had been achieved, there was no need to go around with begging bowls. The sermon from PM came a couple of years lapse when determined ginners had visited India and other cotton growing countries to learn how best to grow more cotton free of dirt and earn more foreign exchange to help stabilise economy.
Since then, however, ginners kept mum until they were hurt on hint to pay taxes. They resorted to refusing growers to oblige them with seed cotton rushing from fields. Government played old trick with ginners to defer taxing them for the time being, besides offering some more gifts such as instruction to concerned authorities for establishment of "Ginning Research Institute" in Multan, anytime soon. The PM assured ginners for allotment of a plot to PCGA for construction of its office in Islamabad. The government will ensure the promises no timeframe was fixed nor it was foreseeable whether the ginners will get rid of the WHT or has been extended time to press for the same!
NEIGHBOUR SHOULD HAVE EXTENDED HELPING HAND:
With great touch of pride people call world of today as global village. To a great extent claim seems to be worthy of the respect. The distance yesterday took weeks to cover, is covered in hours. Notions in trouble would get the assistance in twinkle of an eye. Not, all these if some one's self interest is at a safe distance and certainly served the interests of antagonists. Pakistan may have a genuine grievance against any country, but when in trouble and Pakistan can share the pang, it delays not far a moment. Very recent case of onion, which India needed to tackle surging prices. Pakistan rushed 10,000 tonnes of the same. Even if there would be no ravaging floods in 2010, economy was never in unstable condition and needed next door neighbour, but the way contracted cotton more than one million bales have been held back despite in authorities own words that country has a surplus of nearly 5.5 million bales.
That India is supplying cotton ever in need China is not clear but is evident. Before Lunar New year long celebrations when China stops ordering, it expedites orders. The US weekly sales are bulgy numbers are evident China is receiving cotton. Under the circumstances, India may also have been shipping cotton to China. In Pakistan those who have booked legally and should have been receiving and received the due quantity is being lamented in this country.
The duty-free access of 75 varieties of textile products of Pakistan origin nearly favoured was held up at WTO for second review on India's opposition.
FRIENDS IN NEED!
A week or two weeks back, an awful message through news report come that Turkey will put imports from Pakistan under anti-dumping duty on such items will affect local products. The message sent shock wave through exporters of textile products who shuddered to lose in a brotherly country even.
As Turkish authorities learnt of commotion and Pakistani exporters, they made no delay in assuring the Pak delegation, which had physically visited - that country. The Turkish authorities not unmindful of the present state of Pak economy clarified that initial investigations were being carried out to find out element of dumping of textile fabrics they said could take eight to nine months. Every word had healing effect, as they consoled the delegation to the brim. If the ties are so deep and touching, disappointment has no place.
A word or two also for the visiting delegation, which warm up closer bond further. The approach through better or phone is taken as just formal of little effect. The authorities took pains to explain a transparent process would be adopted before any final decision on any such measures. After pouring sweet sermons the authorities expected something that would not put them in difficult position. A recent deal between the airlines of the two countries is certainly going to be a binding force for more such deals for the good of the two countries. Meanwhile, Pakistan textile exporters should also have the feeling that promoted lasting ties.
CHANGE IF REPLACEMENT MAY DELIVER:
Where exports matter, may be the relevant authorities fail to reach, should look around to gauge forthcoming comments and suggestions to avoid disappointment. The PRGME following the design Indian representative in Geneva dug out, came suggesting our man who could not put up fight matching one, for change someone for the better. Or, else, get ready to lose more than to gain from EU trade concessions.
The Pak exporters' face is not strictly what is welcome. If the EU had selected major component as garments and choice value added products things would be different. Now Pakistanis who had accepted the concession has been deferred this for next three months. This is great loss in view of the fact hard up Pak exporters in many ways are trying to build from scratch. There is time yet provided heads are joined, or PRGMEA suggestion that Qasim Muhammad Niaz, economic minister in Brussels who already got approved the concessions and has full information in this regard be given a chance.
The PRGMEA leaders see Pak ambassador in UN who was asked very simple question but failed to satisfy the WTO. The alleged lack of proper handling has already caused, long three months. All know money and time spent to induce the EU to come to terms has been huge. No further loss can even be imagined.