Trading in cotton moved topsy-turvy with under pinned by global shape and India showing interest in buying rather than exporting during the week ended on January 28, 2012. However, spot rate jumped on the opening day Rs 150 to Rs 5750, ended at Rs 5800.
WORLD SCENARIO:
China is again in reports soon after Dragon New Year celebrations ended. The sales according to USDA report has been up, China has a bulk share. The Chinese inclination is indicative that farmers sowing most likely be much less. Lately futures are keeping 97-98 cents level. Egypt cotton held up for sale due to disturbed conditions sold 5205 tonnes, comparatively better quality lint as was reported from CIS, but prices had no wide effect.
India has been reaping good harvest, meeting entire mills engaged in textile products. Nevertheless, around two million bales place separately for exports. The BT cotton is being extensively utilised which has nearly doubled the production and greatly helping exports earning.
In Pakistan cotton is being allowed to be exported for keeping prices respectable. The ginners are keen to involve TCP to start buying to further help rise prices considered encouraging for the growers. Apprehension is rife that lower prices may be prompting growers to fix lower acreage to avoid losses. On Monday New York cotton futures extended its gains to end at a five-day high as follow-through investor buying gave fiber contracts a lift. The key March cotton futures on ICE Futures US gained 0.77 cent to settle at 99.37 cents per lb, dealing from 98.06 to 99.44 cents. The contract built on an uptrend that began at the 17-month low hit on December 14. "It's holding in here like a rock. The market continues to chew its way up to the near-term of $1.02," said Mike Stevens, an independent cotton analyst in Mandeville, Louisian. Cotton's strength was bolstered by news coming from China, the world's leading consumer of cotton for its textile and apparel industry. Stevens said in a report that "the rate of China's GDP, robust retail sales and factory output plus expectations that China's planted acreage will fall next season all contributed to bullish attitudes." Volume traded on Monday reached almost 17,300 lots, over 15 percent above the 30-day norm, according to Thomson Reuters data. Other technical resistance targets for the March cotton contract loom at 99.95 cents a lb, and then though the key $1 psychological level and then $1.02. A close in the March contract below Tuesday's low of 95.67 cents would likely lead to further losses leading down to 94, then 91 cents. Cotton's open interest - an indicator of investor exposure - stood at 158,439 lots as of January 20 versus 157,614 lots on January 19, the exchange said,said Reuters.
On Tuesday New York Cotton futures closed lower on investor sales as the market declined for the first time in four sessions, with most players waiting for leads on its next move. The key March cotton futures on ICE Futures US fell 1.19 cents, off by 1.2 percent, to settle at 98.18 cents per lb, just above Monday's low of 98.06 cents. The contract had been on a steady uptrend that began when it hit a 17-month low on December 14. Volume traded on Tuesday was about 19,500 lots, around a quarter over the 30-day norm, according to Thomson Reuters data. "Everything is in place for a correction," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. But he said that every time cotton is ripe for a downward correction, support emerges and pushes fiber futures back up. "It (cotton) is resilient," said Stevens. Fundamentally, the market has derived strength from buying by China, the world's leading consumer of cotton for its textile and apparel industry. A close in the March contract below last Tuesday's low of 95.67 cents would likely lead to further losses leading down to 94, then 91 cents, analysts said.
Cotton's open interest - an indicator of investor exposure - stood at 162,671 lots as of January 23, up for a ninth session and rising about seven percent so far this year.
On Wednesday NY cotton futures closed easier on technical selling by investor sales for the second straight session, momentum pointed to more losses over the next few days. Benchmark March cotton on ICE Futures US fell 1.26 cents, or 1.2 percent, to settle at 96.92 cents per lb after trading from 98.05 to 94.59 cents which marked the lowest since January 13. The contract had been on a steady uptrend that began after it hit a 17-month low on December 14. Volume traded on Wednesday amounted to about 23,600 lots, more than 50 percent over the 30-day norm, according to preliminary Thomson Reuters data.
On Thursday NY cotton futures ended lower on technical selling by investors for the third straight session, but dealings stayed in a range and the market could drift into the weekend, analysts said.
Benchmark March cotton on ICE Futures US fell 1.33 cents, almost 1.4 percent, to end at 95.59 cents per lb, moving from 95.29 to 97.41 cents. It was an inside day as the range held within Wednesday's 94.59 to 98.05 band. Volume on Thursday amounted to about 14,800 lots, almost 7 percent below the 30-day norm, according to preliminary Thomson Reuters data.
On Friday the NY cotton futures ended marginally firmer as fibre contracts rose for the first time in three sessions, although the market stayed range-bound while looking toward developments which could spur business next week. Benchmark March cotton on ICE Futures US rose 0.02 cent to finish at 95.61 cents per lb, moving from 95.30 to 96.49 cents. It was an inside day for the second straight session since the range was within Thursday's 95.29 to 97.41 cents band. On the week, the market was down 2.6 percent. Volume on Friday amounted to more than 13,500 lots, over 15 percent below the 30-day norm, according to preliminary Thomson Reuters data.
LOCAL TRADING
The very opening day of the week on the cotton market saw spot rate given a rise of Rs 150 to Rs 5750, as consumers lifted around 12,000 bales of cotton. The rate cotton was lifted was Rs 4500 to Rs 6000 per maund, seed cotton in Sindh was marked at Rs 1800 and Rs 2400, while it ruled in Punjab at Rs 2000 and Rs 2700. Some of the markets were marked closed owing to Lunar year.
On Tuesday cotton market continued firm as spot rate was raised by Rs 50 and Rs 5800, seed cotton in Sindh ruled at Rs 1900 and Rs 2400 while in Punjab it ruled at Rs 2i00 and Rs 2800. Despite discouraging rate for buyers, they lifted 25,000 bales at Rs 4400 and Rs 6100. The market operators were perplexed noting that otherwise itself exporter India approached Pakistan for cotton. This along with global rate, it was India buying that led to price hike in Pakistan.
On Wednesday, cotton retained previous days level and spot rate stayed unchanged at Rs 5800. Seedcotton was also unchanged in Sindh at Rs 1900 and Rs 2400, in Punjab at Rs 2100 and Rs 2800. The buying level improved to 27,000 bales in price range of Rs 4550 and Rs 6100. What a change - supplier Pakistan has gained favour and besides others India too thinks Pakistan can help both supply-wise and price-wise.
On Thursday spot rate was inert at Rs 5800, seed cotton in Sindh ruled at Rs 1900 and Rs 2400, in Punjab at Rs 2200 and Rs 2750. Nearly 10,000 bales of cotton changed hands at Rs 4600 to Rs 6000. The buyers turned caution and hoped prices are destined to turn low as globally prices were slipping. The TCP is yet to begin lifting aimed at stabilising cotton prices.
On Friday Wait-and-see attitude was adopted by the leading buyers in the absence of motivating factors. The official spot rate was inert at Rs 5,800. Prices of seedcotton in Sindh were at Rs 1900-2400 and in the Punjab at Rs 2200-2750. In ready dealings about 3,000 bales of cotton changed hands between Rs 5,300-5800.
ON Saturday mills and spinners showed some interest in fresh buying. The official spot rate was inert at Rs 5,800. Prices of seedcotton in Sindh were at Rs 1900-2400 and in the Punjab at Rs 2200-275. In ready dealings, about 8000 bales of cotton changed hands at Rs 4,600-5800.
WTO MAY APPROVED EU PACKAGE FOR PAKISTAN
Will textile manufacturers and exporters feel relaxed to read in newspaper that approval for Pak package was likely by WTO around a week's time ie February 1, 2012. The EU package in fact has taken so long in coming to age that textile exporters must be shaky about shape. However, from negative Indian's vote to Brazil's too at least one year which was in sympathy for the Pak people affected by unprecedented floods. Apart from homes, bridges and crop all were hit badly.
This formed the back ground of the EU package totalling 71 items mostly textile products, if all goes well, WTO is likely to approve EU draft of unilateral trade package of 75 items for Pakistan as most of the countries have withdrawn their earlier objection.
It is with regret said sources close to cotton textile trade that had this come some months back would have boosted Pak textile exporters morale. However, some days are still in store for an impatient wait and may God help in making the lingering decision a concrete shape. But the sources did not contend what they spoke above, rather in emphatic tone said Pak textile exporters make strong enough to help need in times of needs.
GOOD NEWS: GAS RESTORED
Somewhere in this column readers will find a report negating the same that textile industry in Punjab missing gas for one month or so. Electricity and gas are two things needed by industries to keep economy strong and exchequer brimming. But short sightedness has leaders kept through decades only nagging about big dams a lapse committed by those, who ruled in the past.
Anyway extra ordinary attention being given to tons and tons of coal in country which could yield gas and electricity for ages. Other sources are also being traced such as solar power, wind power, dams etc. Thus far the discovery and use of coal and set up other sources have found place in talks, media reports and gossips. Elections are also extensively in reports and projects talked will soon inaugurated and if possible start working.
For over a month industries in Punjab going without gas expediency has made availability of gas to some zones possible such as Lahore, Faisalabad and Sheikhupura zone. Under the arrangements the textile mills in each zone will be supplied with gas twice a week. There will be no gas supply to any zone on seventh day during the week. Resultantly according to report textile mills in Faisalabad kept their boilers on besides generating electricity through captive power plants to utilise their capacities. A wait until chill continued is required when supplies could be improved.
TEX VALUE CHAIN EXPORTS DOWN 19 PERCENT
At a time when Pakistan is in need of maximum earning from exports, suffered instead a loss of $224.95m.
The manufacturers and exporters of various textile sectors have been makeing hell of, lot of efforts to maximise the flow into kitty, but deficiencies surrounding these sectors proving disappointing. The textile industrialists noted that decline in exports was caused around 19 percent which they attributed to devastating 20 days gas suspension in December forcing closure of textile mills and value chain units.
They pointed out that Pakistan earlier had suffered similar 19 percent exports loss in November 2011 when textile products worth $819.172 million was exported against $1.027 billion during the month last year. The pain expressed exposes producers, manufacturer and exporters that they are all out to contribute towards economy and country and people. They are not unaware of the background why businessmen and exporters have to look to authorities.
There is not merely the lack of will, but material that gives businesses and exports required shape.
TEX INDUSTRY IN PUNJAB WITHOUT GAS SUPPLY
If textile industry fails to deliver in the absence of requisite basic inputs whose fault should it be. The answers are quite evident without of course definite clue. The result is that industry wheat is under pressure and mounting fear of hundreds and thousands workers going out of job. The industrialists are making all bids to find out any arrangement of course, with the help of relevant authorities. The assurance do often is advanced how genuine they prove in the end remains hazy as long as they stay looking for.
How under the trying conditions the industrialists can make both ends meet. If taken as a whole who can imagine how the workers attached with the production and their family members struggle to survive. Industrials and workers agitation apart Punjab Chief Minister has also taken notice of crisis vowing to approach to the court of law to redress the situation. Will this vow work? Those who watch from a distance are not very hopeful as very little is likely to take until middle of February when domestic pressure on demand side would come down with increase in atmospheric pressure.