Cotton

[rakeshmalik]

Prices up in lean business on cotton market
RECORDER REPORT
KARACHI (April 26 2008): Higher trend was seen on the cotton market on Friday in thin business. Leading buyers were prominent by their absence, dealers said. The Karachi Cotton Association (KCA) official spot rate was up by Rs 50 to Rs 3350, they said. In ready, 3000 thousand bales changed hands between Rs 3465-3600, they added.

Market sources said that higher dollar rate caused an increase in the cotton rates. According to the Federal Bureau of Statistic (FBS), during the three-quarter of the current fiscal year, above 4 million bales were imported costing nearly 66 billion rupee worth foreign exchange.

It is expected that the textile production may show some improvement in the coming days after the appreciation in the US currency value, they added. On Thursday, cotton futures finished sharply easier on investor liquidation catalysed by a wide-ranging sell-off in the commodities complex, with analysts saying more losses seem likely into next week.

The ICE Futures' July cotton contract slid 1.95 cents to close at 72.13 cents per lb, trading from 72.07 to 74.90 cents. The new-crop December cotton futures fell 2.00 to 80.57 cents, dealing from 80.50 to 83.30 cents. The following deals were reported as some 400 bales from Ghotki sold at Rs 3600, 600 bales from Dhearki at the same rate and 2000 bales from upper Sindh at Rs 3465, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.32 Kgs 3350.00 50 3400.00
Equivalent-------------------------------------------------
40 Kgs 3590.00 50 3640.00
===========================================================

 

[rakeshmalik]

April 25, 2008

Biography

The battle between supply and demand reasserted itself in the cotton market as New York futures prices retreated as the May contract’s first notice day approached this week. The big bang failed to materialize as the near 1.25 million bales of certificated stocks shoved prices lower—in line with the economist’s law of supply and demand. As of April 25 certificated stocks totaled 1,100,198 bales with another 141,989 bales awaiting review. Early suggestions are that only about 100,000 bales of cotton will change hands in the delivery period, or less than ten percent of total certificated stocks. Thus, is cannot be argued that the New York contract has lost its ability to accomplish its object of price discovery. The market will scratch around in the short term; looking for direction and taking its lead primarily from West Texas weather patterns and price activity in other commodity markets. The large speculative funds remain very keen on cotton, however, they will be much less aggressive above 74 cents, basis July.

As the market returns to it supply demand roots, the demand side of the equation takes on a more important role. Both U.S. exports and consumption have waned in the recent months. With lower prices the disappearance of U.S. cotton will find some relief and exports should expand.

Export sales lagged during the week ending April 17, 2008 as mills adjusted their price expectations lower. Net sales totaled only 168,000 RB. Upland sales totaled 163,400 RB while Pima sales were 4,600 RB. Turkey (57,400 RB); Indonesia and Taiwan were the primary buyers of Upland. Egypt (2,300 RB); Pakistan, and Japan were the primary buyers of Pima. Weekly export shipments continue to run about 100,000 bales below the level required to reach the USDA estimate of 14.5 million bales. Exports totaled 284,900 RB with Upland accounting for shipments of 259,700 RB while Pima shipments were 25,200 RB. Primary destinations for Upland were China (85,500 RB); Turkey, and Indonesia. The primary destinations for Pima shipments were China (6,600 RB); Pakistan and India.

U.S. domestic consumption declined for the fourth consecutive month, declining from its November high of an annualized level of 4.8 million bales down to the March estimate of 4.2 million bales. Annualized consumption for the 2007-08 year to date (eight months) is 4.5 million bales, extending the annual decline to eight years.

The pressure of certificated stocks was not the only factor causing prices to move lower on the week. The ever declining value of the U.S. dollar reversed it course at week’s end; pushing the value of the dollar higher, thus adding pressure on all commodity prices. The slide in the dollar has, without doubt, supported the increase in commodity prices. Nevertheless, the food grains, feed grains and oilseed stocks are low, relative to world demand. Cotton stocks are high, but could see stocks decline as much as ten million bales this season.

The ratcheting upward of commodity prices is not complete. Prices will move higher. However, the big jump has been accomplished. Cotton prices will have to move higher in order to complete for acreage in 2009. Merchants should be expected to begin offering price contract to growers. The liquidity debacle brought about by rapidly rising prices could raise its head again. However, merchants and cooperatives are better positioned to meet such a problem. The December 85 cent calls are priced at 572 points. Selling such a call option would offer the grower an opportunity to capture that with the only worry being that their crop would be sold at 85 cents, basis December futures, should the market increase to that level.

 

[rakeshmalik]

April 25, 2008

New York Close (vs. previous week)
Jly08 71.44 -316 Mch09 84.08 -275
Oct08 76.39 -312 May09 85.31 -258
Dec08 80.04 -284 Jly09 86.51 -240

 

[rakeshmalik]

Cotlook 07/08 A (FE)
74.15 -155
U.S. Exports Net Sales
Accumulative 12,116,700
Weekly 168,100
Turkey 57,300
Indonesia 27,600
Taiwan 17,100
Wkly Shipments 284,900
NYK Open Interest
250,451 -8,897
Net Speculators’ Position
Long 11.1% +0.3%
NYK Certificated Stocks
1,116,084 +102,946
Awaiting Review 141,989

 

[rakeshmalik]

Cotton growers training
RECORDER REPORT
FAISALABAD (April 27 2008): The third phase of training for cotton growers in 568 villages, and the first phase of training for paddy growers in 261 villages have been started in the Jhang district. The training is being imparted to cotton growers by 21 teams of Agriculture Department, and by seven teams to paddy growers. The training sessions will continue till the end of May, said department sources.

 

[rakeshmalik]

Buyers cautious due to high prices on cotton market

KARACHI (April 27 2008): Cautious attitude was observed by the mills on the cotton market on Saturday amid higher trend in the prices, they said. The Karachi Cotton Association (KCA) official spot rate was inert at Rs 3350. In ready business, 600 bales changed hands between Rs 3300-3400, they said.

According to the market sources, many spinners tried to keep away from the market mainly because of upward trend in the prices. The ginners, however, may consider the prevailing trend and try to keep the prices at the realistic levels.

If they lower the asking prices the spinners may resume forward buying, they said. On Friday, the cotton futures closed lower to late investor sales and in line with weaker soybean prices in Chicago, with brokers saying market direction will depend on what happens in the grains complex next week.

The ICE Futures' July cotton contract fell 0.69 cent to close at 71.44 cents per lb, trading from 71.25 to 73.60 cents. The new-crop December cotton futures eased 0.53 to 80.04 cents, dealing from 79.70 to 82.12 cents. The following deals were reported as some 400 bales from Ghotki sold at Rs 3600, 600 bales from Dhearki at the same rate and 2000 bales from Upper Sindh at Rs 3465, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.324 Kgs 3350.00 50 3400.00
-----------------------------------------------------------
Equivalent
-----------------------------------------------------------
40 Kgs 3590.00 50 3640.00
===========================================================

 

[rakeshmalik]

Cotton lint steady in west India

26 Apr 2008 2:32 pm Viewed: 5

Mumbai - Spot cotton lint traded slightly down at the lower level in Gujarat while prices were almost steady in other parts despite normal business across western India Saturday. Demand from millers was also normal.

At Kadi in Gujarat, cotton lint S-6 A-grade was quoted in the range Rs 22,200-Rs 22,600/candy while Average-grade traded at Rs 21,500-Rs 21,900/candy. Kapas got offered at Rs 510-Rs 600/maund. The State recorded arrivals of 20,000 bales today.

In Vidarbha region of Maharashtra, the 28-mm cotton lint traded at Rs 21,300-Rs 21,600/candy; 29-mm cotton lint traded at Rs 21,700-Rs 22,000/candy. Around 10,000 bales arrived in the State today.

At Sendhwa market in Madhya Pradesh, the 28-mm cotton lint traded at Rs 21,600-Rs 21,900/candy; 29-mm cotton lint traded at Rs 22,100-Rs 22,400/candy; and 30/31-mm cotton lint at Rs 22,400-Rs 22,900/candy. Around 1,000 bales of cotton lint reached here today.

 

[rakeshmalik]

A deal in new crop cotton struck at Rs 3700, spot rate raised to Rs 3350

KARACHI (April 28 2008): The local cotton market's feature was consumer interest in new cotton still in field at record breaking levels such as Rs 3,600 and Rs 3700 though current crop changing hands at or between Rs 3435 and Rs 3600. The spot rate was raised by Rs 50 to Rs 3350 on Friday.

WORLD SCENARIO:

The cotton futures moved both ways during the past week, dependent greatly on foreign influences, investment selling and Chicago signals on grains boost or dip as players waited for May deliveries. On Monday, however, May lost substantially by 1.45 cents to 69.43 and July shed 1.25 cents to 73.35 cents a pound.

On Tuesday trend turned to boost with consumer buying and investors' short covering besides grains showing rallies. Against goings on Monday, players were optimistic for a technical bounce and it was there. They showed some concern as to cotton actually taking cue from grains like soyabean, wheat, corn and lately from sustained firm crude prices. Some analysts pointed out that cotton crop report by the USDA was very much in mind to really fix a direction.

On Wednesday downward drift was observed on the NYCE owing to speculative sales and liquidation of positions in the spot contract due for delivery any time. The analysts expressed opinion that interest in May has softened and the amount still to be delivered was expected to be marginal. However, the traders want to see what USDA report has to say on weekly export sales for an assessment as to how further shape of things will come up.

On Thursday-the cotton futures drifted downward sharply on investors liquidation owing to impact of wide variety of commodities fluctuations. The players were expecting more dips to follow. Anyway the weekly export sales data failed to reenliven activity. The traders said technical deterioration in cotton, the general meltdown in commodity indices and follow through strength in the dollar deflated the fiber contracts.

The ICE Futures' July cotton contract slid 1.95 cents to close at 72.13 cents per lb, trading from 72.07 to 74.90 cents. The new-crop December cotton futures fell 2.00 to 80.57 cents, dealing from 80.50 to 83.30 cents.

On the weekend, as predicted futures retreated due to late investor sales in line with weaker soyabean prices in Chicago. Analysts said strengthening in dollar would put further pressure on cotton. Meanwhile July contract shed 0.69 cent to 71.44 cents while new crop Decenber shed 0.53 to 80.04 cents a pound

LOCAL TRADING:

The millers and spinners are now concentrating on new crop advance buying injecting fear in the sellers about the stocks they preserved for obvious reason. The spot rate was maintained at Rs 3300 until Friday when it was raised by Rs 50 to Rs3350, though in ready prices inched sideways per the situation. The feature however was advance trading in cotton which roared to Rs 3600 and beat the level next day being quoted at Rs 3700 per maund.

The phutti too held fast to ruling level - Rs 1200/1600 depending on the quality. The overnight scenario change in crop prices has hit Pak trading in cotton also. Cheerful going that used to be the characteristic has come under the impact of unethical practices. Only around 2000 bales changed hands as sellers still were hopeful that better return will be ensured on sale of stocks with them.

On Wednesday market looked deserted since few interested millers were out but failed to strike any deal. The prices depicted discouraging sign. Market analysts saw this as a trend against the buyers who may be face to face with ever more discouraging prices due to worldwide phenomena. The water supplies are main factor which the government is mindful about.

On Thursday in the absence of PCGA report both sellers and buyers were hesitant to decide. The cotton consumers were aghast at the sharply rising prices, without access to facts about the production figure. The market as a whole showed apprehension over reports that shortfall of water for cotton crop was causing delay in sowing. Still fear some report was that wheat harvest hold up was bound to delay cotton sowing which was likely to hit production and would damage quality also.

On Friday ginners gathered courage and raised the spot rate by Rs 50 to Rs 3350 hitting demand, restraining change of hand to just three deals in the price range of Rs 3465 and Rs 3600 per maund. The rising dollar value has upset local trading. But consumers had reservation. On Saturday some 200 bales of cotton from Jam Sahib at Rs 3300 and 400 from Sadiqabad were sold at Rs 3400.

LOCAL PRODUCTION OF MACHINERY, DYES IS CURE?

A moments ponder may dawn on authorities and of course the exporters whether cure of the ills lie in production of textile machinery and dyes and chemicals. Machinery needs change as the fashion perception changes in consuming countries. Why India and China are quoted for subsidies and not for booming on local production of every thing textile sector needs.

GOOD SOUNDING CALL

The Export Processing Zone Authority (EPZA) has given a call to interested investors to take advantage of its offer. It has been very particular about quarters interested in garments and textile products (in other words, manufacturers of value-added goods). Cotton and yarn exports had not done any good for this country.

However, what has been shocking in that talk about setting up textile town or garment city has dimmed for sometime past. Only glimpse is seen in Faisalabad Industrial Estate. Wheather it is particularly related to the area with textile and garments, is not clear. However, the EPZA chairman took advantage of International Machinery Exhibition of garment and textile technology at the Expo Centre the other day, perhaps second time in a fortnight, that investment was invited from textile and apparel and garment manufacturers and exporters to set up.

The EPZA has been offering developed land along with all infra-structures facilities, cheaper electricity (how is not made clear) water and gas under one-window operation in export oriented textile industry of Pakistan. The offer is open for setting up textile and garment industry in Karachi, Sialkot, Risalput and Gujranwala. The invitation is open also in respect of investors without making clear that new ones will be more welcomed for they will show real zeal and enthusiasm needed for an industry that should stand on its own money and labour expertise.

TAKE CARE OF APPAREL EXPORTERS:

Apparel exporters should be facilitated as far as practicable and more particularly should be protected from any odds confronting them.

A strong team of members, who suffered, enlightened FIA additional Director about one of several cases where the freight forwarders committed fraud by issuing house bill of lading to the exporters of apparels. Although the bill had no title the shipped goods of the exporters were released by the farwarders counter parts and duly delivered to foreign buyers without payment to the bank.

It is hoped some way has been found out in the meantime and both the exporters and country gained.

RESERVATION ABOUT BT COTTON:

Most of the major and minor cotton growing countries have tried and got the benefit from Bt cotton which gives more yield upto 50 percent, reduces insecticide sprays by half with environmental and health implications and increases income by upto $270 or more per hectare, which has contributed to social benefits and the alleviation of their poverty. Why Pakistan is shy in growing Bt cotton as its experiment has not been a failure. In very hush manner mention is made that experience has been carried out. Then what's the restraint.

The mills have been crying they need cotton much more than the country is producing (or more or less 15 million bales). The country had once or twice grown cotton up to the requirement but not during 2007-08 when a harvest of 11 million bales or so is expected. Thus the consumers have already imported a substantial quantity. The millers are pretty optimistic that in coming year the crop of cotton will be much higher.

The Bt cotton, if the experiment has proved encouraging should be of great help. The ready example is that of India and China besides source country such as America. India this year has turned into a net exporters from an importer. China too is gaining as it is now importing much less than when Bt cotton was not introduced there. The textile exporters, who have been faced with high cost of doing business as they have to dish out billions of dollars on imports of textile machinery, dyes and chemicals to name a few, have been drawing the attention of new government to cross the bridge smoothly.

In the meantime two textile machinery shows of foreign make have taken place. But the importers have been reporting drop in imports of machinery without mentioning how they are doing without dyes and chemicals, the sources asked.

LET JOINT STRATEGY WORK AND SOON:

The textile sector is in hot soup for some months past and desperately looking for cooperation among sub-sectors on issues of textile value chain to come to grip over issues confronting them. The knowledgeable sources prayed and hoped some way out is found which brings good gain harvest.

The value addition was talked about in whispers and got some meek recognition under late Dr Mahbubul Haq, but failed to make his conviction a running policy. The draconian post 2005 times brought in sharp focus tough competition from so-called regional countries.

 

[rakeshmalik]

Burkina Faso 2007-08 cotton output falls
OUAGADOUGOU (April 26 2008): Burkina Faso will increase its incentives to cotton farmers in the upcoming season in a bid to revive the sector after late rains and low prices caused output to plunge more than 45 percent in 2007/08.

Poor weather conditions, low farm-gate prices and a rise in the price of fertiliser and chemicals drove production down to just 360,000 tonnes last season from 660,000 in 2006/07, the head of its biggest cotton firm SOFITEX said on Thursday.

SOFITEX Managing Director Celestin Tiendrebeogo said the industry wanted to revive its fortunes in 2008/09, aiming for output of 650,000 tonnes, and would increase the amount the country's struggling farmers were paid. "We've decided to grant a rebate of 15 CFA francs ($0.036) per kg to growers for the next season," Tiendrebeogo said.

"The only condition is that they reach the production target of 650,000 tonnes of cotton seed for the country as a whole, of which 600,000 tonnes will (be) for SOFITEX," he said. Last year's rebate was 10 CFA per kg, on top of a farm-gate price of 145 CFA per kg, meaning farmers received a total of 155 CFA per kg.

The farm-gate price for 2008/09 has been set at 165 CFA per kg for the best quality seed, meaning farmers will receive a total of 180 CFA per kg this year. Seasonal rains came late last season to much of Africa's normally arid Sahel region where cotton is grown, but were torrential when they came, causing rivers to burst their banks and sweeping away crops and houses in some places.

In the village of Sobara near the border with Ivory Coast, farmers said they welcomed the higher farm-gate price but said cotton companies also needed to address the problem of late payments if they really wanted to give reassurance

 

[rakeshmalik]

Prices seen at high level on cotton market
RECORDER REPORT
KARACHI (April 30 2008): Speculative buying was witnessed on the cotton market on Tuesday as some profit seekers were trying to manipulate the situation according to their circumstances following the short crop scenario, brokers said. The Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 3375.

In ready business, 1800 bales changed hands between Rs 3450-3600, they said. The final phutti arrival figure may be issued within a week, which may help in setting the direction of market for the near future.

Delay in wheat harvesting and shortage of irrigation water in the cotton growing areas give an impression of less production for the next season, they said. The ginners were taking full advantage by holding the unsold stock, which are very thin in quantity, especially fine type is near to end, they observed.

After the rise in the spot rate, prices in the ready business, moved with gradual pace due to hovering fears of shortage problem, they said. On Monday, the NY cotton futures showed firmness as the ICE Futures' July cotton contract rose 0.17 cent to close at 71.61 cents per lb, trading from 71.42 to 73.25 cents. The new-crop December cotton futures added 0.22 to 80.26 cents, dealing from 80 to 81.77 cents.

Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the July contract would need to climb above 73 cents and December must race past 81.25 cents to "show there is a bottom" in the market.

THE FOLLOWING DEALS WERE REPORTED: some 200 bales of cotton from Nawabshah sold at Rs 3450, 400 bales from Khumb at Rs 3500, 200 bales from Buchari at Rs 3450 and 1000 bales from Harapa sold at Rs 3600, dealers said.

===========================================================
The KCA Official Spot Rate for Local Dealings in Pak Rupees
-----------------------------------------------------------
FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
===========================================================
Rate Ex-Gin Upcountry Spot Rate Ex-Karachi
for Price Sales Tax @ 15%
===========================================================
37.324 Kgs 3375.00 50 3425.00
-----------------------------------------------------------
Equivalent
-----------------------------------------------------------
40 Kgs 3617.00 50 3667.00
===========================================================