Cotton

[rakeshmalik]

Cotton prices again reaching top levels

LAHORE (August 14 2008): After slouching earlier during this week, cotton prices in the ready market again reached top level at midweek due to floundering Pakistani rupee against the united states dollar, a spattering of rain received in the cotton belt in both Sindh and Punjab this week and more current demand compared to supply of cotton due to temporary delay in seedcotton (kapas/phutti) arrivals following the rains.

According to trade talk in Karachi, cotton crop for the current season (2008-2009) could still come close to about 12 million domestic size bales provided the cotton fields in Sindh and Punjab do not receive a battering from excessive monsoon rains or cloudy weather later on.

However, it must be mentioned that on their part the weather pundits are forecasting more rains during the remainder of the monsoon season. Nevertheless, wholesome rains have amply filled the large reservoirs of both Tarbela and Mangla dams and also swollen the rivers which have ruled out any paucity of water for the current cotton crop which was being perceived earlier.

Brokers at the money market in Karachi said that the Pakistani rupee hit an all time low when it officially closed at Rs 75.10 against the greenback on Wednesday with unofficial quote even lower at Rs 75.30 for a dollar.

Thus import of foreign origins of cotton which sometimes appeared attractive to the domestic mills may be reviewed by the importers from time to time. Of course, the export of yarns and other textile goods will now receive a much higher rupee value against the American dollar, particularly for the value added material.

These reports indicate that the domestic crop is deemed alright up to now, namely "so far so good" except that any inclement weather hereafter could adversely effect both the size and quality of the current cotton crop (2008-2009) in Pakistan.

The areas around Rajanpur in Punjab, however, have suffered drastically due to rains and floods. It may be recalled that for cotton sowing in the running season (2008-2009), the government had reduced the target of output from 14.14 million to 12.60 million domestic size bales about a month ago based on farmgate production. Traders are thus estimating the current crop cotton output to be close to 12 million bales on an ex-gin basis.

According to one recent report, mills in Pakistan may consume between 15.25 to 15.5 million local size bales this season (2008-2009). Domestic textile industry is still not performing its best and is also suffering recessional set back like other leading producers such as China and India whose textile output and projections also remain essentially depressed.

In this regard, government has done well to announce recently that a notification has been issued to reduce the gas tariff for captive power plants in the textile industry from 68 to 31 percent with effect from the 1st of July 2008. This step should provide a much needed relief to the textile industry. Furthermore, the Federal Minister for Finance Naveed Qamar has given his assurances to the exporters of towels and bedwear goods that the government will provide support to them.

Like the price of so many other goods and commodities, crude oil prices have also plummeted from $147 to $114 per barrel recently. The domestic trade and industry deserves commensurate relief by reducing the energy cost including gas and power supply immediately so that trade and industry are revived without any loss of time to breed necessary employment and also pave the way for significantly more foreign exchange earnings.

Due to delay in arrivals of seedcotton (kapas/phutti) following seasonal rains in several parts of the cotton belt, lint prices have again come close to record levels during the middle of this week.

While it is hoped that the lint prices may ease with increased arrivals of cotton over the forthcoming weeks, the plunging Pakistani rupee against the United States dollar may not allow cotton values to recede significantly. In other words, the cheapening of the Pakistani rupee against all the major currencies may keep local prices at a higher plane.

A delay in arrival of cotton crop has resultantly propped up the cotton prices. The price of seedcotton (kapas/phutti) in Sindh reportedly ranged from Rs 1900 to Rs 1950 per 40 kgs, while seedcotton prices in Punjab extended over a much wider range extending from Rs 1700 to Rs 2100 per 40 kgs owing to a big difference of Rs 400 per 40 kgs due to a large variation in quality.

Lint prices in Sindh reportedly ranged from Rs 4175 to Rs 4200 per maund (37.32 kgs), while in the Punjab they were said to have ranged from Rs 4200 to Rs 4275 per maund quality wise.

In ready business, 200 bales of cotton from Mirpurkhas in Sindh reportedly sold at Rs 4175 per maund (37.32 kgs) on Wednesday, while 200 bales each from Jhol, Sinjoro, Khipro and 400 bales each from Shahdadpur and Tando Adam all were said to have been sold at Rs 4200 per maund.

In the Punjab, 200 bales from Burewalla reportedly sold at Rs 4250 per maund and 800 bales from Kabirwala sold at Rs 4275 per maund. The tone of cotton prices was described as tight as some leading mills appeared to be quite active in covering cotton from both local and foreign sources.

Decrease in 2008-2009 cotton output in USA from 14 million projected bales last month announced by the United States Department of Agriculture (USDA) to 13.77 million bales (480 lbs) now has given an impetus to New York futures prices despite recent strengthening of the United States dollar against several other leading currencies. Also, fund buying despite selling by the speculators consolidated the fiber prices.

Thus on last Tuesday, the key December 2008 delivery on the New York cotton futures market settled higher at US cents 69.63 per pound (up by 89 points), the March 2009 delivery ended the session at US cents 74.80 per pound (up by 80 points), while the May 2009 delivery closed for the day at US cents 76.60 per pound (up by 94 points).

There remains a chance, however, that the cotton prices may see some pressure due to more arrivals later in the season with the perception of a more positive picture of cotton development in the key state of Texas following recent rains there.

 

[rakeshmalik]

cotton views

It is the same story…another week of cotton trading and another week of active volatility. Market volatility that was considered wild just a year ago has become common place in the cotton market. In fact, the only guarantee in the market is that price volatility will remain. This August USDA supply demand report, while not offering potentially bullish news for the cotton market did little more than solidify the verse that the market has been singing for some time. Specifically, the report revealed the bullish outlook for the 2009 calendar year as well as the 2009-10 marketing season. Possibly however, the best news was that the report did not suggest any additional bearish news for the remainder of 2008. That is, while the New York December contract can still dip back down to near 68 cents a time or two, the mid 70 cent level should be a major part of any planning horizon for both the grower and textile mill.

Highlights of the August supply demand report included lower world and U.S. ending stocks, lower world and U.S. production, and a slight increase in world consumption for the 2008-09 year. Additionally, U.S. exports were projected to increase to 15.0 million bales, 500,000 bales above the July projection. World production was projected at 112.1 million bales, compared to the 115 million bale projection last month. This recent projection was 7.2 million bales below the 2007 production. Major decreases were projected for the U.S.; down 5.4 million bales from last year, India; down 800,000 bales, Brazil; down 750,000 bales and China; down 300,000 bales.

The 500,000 bale increase over last month’s projection for U.S. exports was significant in that the U.S. crop projection was lowered 200,000 bales below last month’s projection. USDA typically adjusts U.S. exports in the same direction it adjusts crop size. Thus, this month’s inverse relationship suggests that major exporting countries are expecting a relative reduction in their exports. Thus, price activity for late calendar year 2008 and throughout 2009 should be bullish.

The U.S. crop remains very dependent on tomorrow’s weather conditions. Yet, the poor subsoil moisture in Texas plains, coupled with numerous damaged fields, suggests the size of the U.S. crop will be further lowered during the course of the growing season. Because of the major acreage shift out of cotton in the Midsouth, the regional yield will approach 1000 pounds per acre. That is, Midsouth cotton was planted on prime cotton soils this season. Yet, with over half of the U.S. acreage planted in Texas, the average U.S. yield will likely dip below the August USDA estimate of 842 pounds per acre. Recall the 2007 average U.S. yield was 879 pounds, thus the stage is set for the 2008 average U.S. yield to further disappoint.

In line with USDA’s optimism regarding 2008-09 exports, the first weekly export sales report of the new marketing year showed a net of 399,600 RB of cotton were sold. Upland sales were 389,900 RB and Pima sales were 9,700 RB. Primary buyers of Upland were China (176,900); Turkey and Indonesia. Primary buyers of Pima were Indonesia (7,600 RB); Thailand and Germany. Shipments were on tract for a 15.0 million bale export year, with 51 more weeks remaining as total shipments were 224,100 RB. Upland shipments were 222,500 RB and the primary destinations were China (77,000); Turkey and Mexico. Pima shipments were 1,600 RB with India (600 RB); Germany and China being the primary destinations.

Finally, the outside commodity markets will continue to impact cotton. Yet, while all markets have whipsawed cotton prices, it is likely that major responses will come only from the grains and oilseeds markets. The Olympic Games are here and now almost history. For the past six years China has been building the equivalent of a one to three million person city--each week! With that now history, world demand for raw materials have been significantly reduced. Too, even China’s demand for oil based products will see a momentary lull before the overall growth slows. Too, the value of the U.S. dollar has bottomed and is now showing strength against some currencies. This strength will continue at a slow pace and will have at the most, if, any, a very slight negative impact on U.S. cotton exports. It will not be a factor in the cotton market during the coming year.

The status quo suggests that New York futures are poised to validate a market bottom. Assuming the September USDA supply demand report is similar, or even more bullish than the August report, then cotton prices will continue their move toward 90 cents. Yet, don’t look for 90 cents until the 2009 crop is planted---and that may be too optimistic. However, for textile mills, prices will only continue to increase.

 

[rakeshmalik]

Spot rate raised to Rs 4,200 on cotton market

KARACHI (August 17 2008): KCA official spot rate was maintained upward on persisting demand by the exporters, dealers said on the cotton market on Saturday. The official spot rate was raised by Rs 75 at Rs 4200, they said. In the ready business phutti prices in Sindh were same at Rs 1950 and in Punjab unchanged at Rs 1800-2100, they added.

Market sources said that strong dollar is attracting the exporters as they are making new deals for forward buying and it is likely that the prices go up further in the coming days. They said that cotton belt at the river bank may be hit by the floods, this factor may cause damage to the production.

Presently, rising trend in the dollar could be a leading factor, which is giving a boost to the prices, they added. On Friday, the NY cotton futures ended at an 11-month low on investment fund liquidation inspired by a broad sell-off across the commodity markets, and prices may slide further on follow-through pressure next week, brokers said.

The key December cotton contract sank 2.40 cents to conclude at 67.08 cents per lb. Based on the weekly charts of the contract that would be its lowest finish since the middle of August 2007. The contract moved from 67.01 to 69.41 cents. Volume traded in the December contract hit 16,050 lots at 3:15 pm EDT (1915 GMT).

The following deals were reported : some 800 bales of cotton from Mirpurkhas sold at Rs 4200/4225, 1000 bales from Sanghar at Rs 4200-4250, 1200 bales from Shahdadpur at Rs 4225-4250, 1600 bales from Tando Adam sold at Rs 4225-1240, 1000 bales from Hyderabad at Rs 4225-4240, 200 bales from Shahpur Chaker finalised at Rs 4225, 800 bales from Pakpattan at Rs 4250-4275, 400 bales from Afrifwala sold at Rs 4250, 1000 bales from Burewala 4225-4250, 200 bales from Gojra sold at Rs 4250, 200 bales from Bashirpur at Rs 4275, 1600 bales from Sahiwal at Rs 4250-4300 and 200 bales from Vehari at Rs 4250, 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 4,200.00 100 4,300.00
-----------------------------------------------------------
Equivalent
-----------------------------------------------------------
40 Kgs 4,501.00 100 4,601.00
===========================================================

 

[rakeshmalik]

Rates almost stay put on cotton market

KARACHI (August 19 2008): Firmness prevailed on the cotton market on Monday as prices maintained the weekend levels in process of trading, dealers said. The official spot rate was unchanged at Rs 4200, they said. In the ready business, the phutti prices in Sindh were same at Rs 1950 and in Punjab was unchanged at Rs 1800-2100, they said.

According to the market sources, activity was a bit low as compare to the last session as many participants were busy in exchanging views over the fresh development on both economic and especially on the political front following the resignation of President Pervez Musharraf.

The whole nation was in grip of uncertainties before and after the President Pervez Musharraf announced his resignation in the face of an impending impeachment motion by the ruling coalition government. The former army chief and firm US ally has seen his popularity slide over the past 18 months and has been isolated since his allies lost a February election.

THE FOLLOWING DEALS WERE REPORTED: some 2000 bales of cotton from Tando Adam sold at Rs 4225/4265, same figure from Sanghar at Rs 4235-4265, 1000 bales from Shahdadpur at Rs 4225-4265, 600 bales from Mirpurkhas sold at Rs 4250, 800 bales from Khipro at the same rate, 200 bales from Shahdadpur at Rs 4150 for 1st September delivery, 600 bales from Pakpattan at Rs 4250, 1600 bales from Chichawatni at the same rate, 200 bales from Kabir wala and 600 bales from Burewala done at the at Rs 4250, 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 4,200.00 50 4,300.00
Equivalent-------------------------------------------------
40 Kgs 4,501.00 50 4,601.00
===========================================================

 

[rakeshmalik]

New York cotton settles a shade higher
NEW YORK (August 19 2008): Cotton futures edged up to a firm close on Monday on trade and investor buying as the market staged a modest recovery after sinking last week to an 11-month low, brokers said. The key December cotton contract added 0.19 cent to close at 67.37 cents per lb after trading from 67 to 68.42 cents.

On Friday, the contract ended at 67.08 cents. Based on the weekly charts of the contract, that was the lowest finish since the middle of August 2007. Volume traded in the December contract hit 8,173 lots at 2:36 pm EDT (1836 GMT).

Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said trade buying hoisted the market away from 67 cents for December delivery, but the move "ran out of gas" in the over 68 cents. Otherwise, the action of the market was a bit discouraging as far as establishing a bottom at this time is concerned, he added.

"The way it is behaving, it seems like it wants to go lower," a dealer said. Analysts said the longer-term outlook for cotton is bullish with plantings in most producing countries down sharply and supplies expected to tighten. World 2008/09 cotton ending stocks are seen dropping sharply to 50.98 million bales, from 53.24 million, according to the US Agriculture Department's monthly supply/demand report.

But analysts said the fundamentals are a non-factor in cotton's movements so far the past few days. Stevens said it is particularly striking that cotton, which used to react to movements in other commodity markets, "doesn't seem to be reacting to anything."

Brokers Flanagan Trading Corp sees support in the December contract at 66.60 and 65.65 cents, with resistance at 67.55 and 68.50 cents. Volume traded on Friday reached 20,026 lots, exchange data showed. Open interest in the cotton market rose 1,276 lots to 217,944 contracts open as of August 15, exchange data showed.

 

[rakeshmalik]

Dollar's slide gives impetus to cotton market

KARACHI (August 20 2008): Declining trend in the dollar's value dominated the cotton market on Tuesday as the prices came down sharply, dealers said. The official spot rate was unchanged at Rs 4200, they said. In the ready business, the phutti prices were down by Rs 25 to Rs 1900-1925 in Sindh and same trend mirrored in the Punjab, shedding Rs 100 to Rs 1700-2000, they said.

Market sources said that the cotton market was in grip of rising speculations that the prices may come down further on arrival of phutti and falling demand by the exporters after dollar's sharp decline versus the rupee. The surge in dollar's value was an attraction for exporters and it is likely that they (exporters) and mills may slow buying in anticipation of slide in the prices of cotton in the coming days, they said.

In the meantime, the position is just like dollar as currency speculators were selling the greenback amid rising fears about the fall in its value after the Musharraf's resignation market players said and added that similarly, the ginners were trying to attract buyers by lowering the asking prices.

On Monday the NY cotton futures edged up to a firm close on trade and investor buying as the market staged a modest recovery after sinking last week to an 11-month low, brokers said. The key December cotton contract added 0.19 cent to close at 67.37 cents per lb after trading from 67 to 68.42 cents.

On Friday, the contract ended at 67.08 cents. Based on the weekly charts of the contract, that was the lowest finish since the middle of August 2007. Volume traded in the December contract hit 8,173 lots at 2:36 pm EDT (1836 GMT).

The following deals were reported as some 2400 baes of cotton from Shahdadpur sold at Rs 4175-4250, 1200 bales from Tando Adam at Rs 4125-4225, 4100 bales from Sanghar at Rs 4100-4225, 800 bales from Khipro sold at Rs 4125-7175, 1000 bales from Mirpurkhas at Rs 4100-4200, 800 bales from Sultanabad sold at Rs 4100-4200, 600 bales from Hyderabad sold at Rs 4150-4200, 800 bales from Bhawalnagar sold at Rs 4150-4250, 1600 bales from Burewala sold at Rs 4150-4225, 600 bales from Chichawatni sold at Rs 4150-4200, 400 bales from Mian Channu at Rs 4150-4200, 200 bales from Khanpur at Rs 4200, 200 bales from Gajjo at Rs 4200, 200 bales from Mungi Bunglow sold and Rs 4175 and 200 bales from Haroonabad sold at Rs 4215, 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 4,200.00 50 4,300.00
Equivalent-------------------------------------------------
40 Kgs 4,501.00 50 4,601.00
===========================================================

 

[rakeshmalik]

Cotton lint gains in Maharashtra, MP
20 Aug 2008 2:25 pm

Mumbai - Cotton lint prices jumped Rs 100-Rs 200/candy amid fresh demand at major markets across Maharashtra and Madhya Pradesh Wednesday. Prices were quoted to be steady in Gujarat.



At Kadi market in Gujarat, cotton lint S-6 A-grade was quoted at Rs 27,800-Rs 28,100/candy while average-grade traded at Rs 27,300-Rs 27,600/candy.



In Maharashtra, the 28MM cotton lint traded at Rs 27,500-Rs 27,800/candy; 29MM cotton lint traded at Rs 28,000-Rs 28,200/candy; while 30+MM cotton lint traded at Rs 28,300-Rs 28,600/candy; and 31+MM cotton lint traded at Rs 28,800-Rs 29,100/candy.



At Sendhwa market in Madhya Pradesh, the 28+MM cotton lint traded at Rs 27,500-Rs 27,800/candy; 29MM cotton lint traded at Rs 28,000-Rs 28,200/candy; 30+MM cotton lint traded at Rs 28,300-Rs 28,600/candy; and 31+MM cotton lint at Rs 28,800-Rs 29,100/candy; and DCH variety traded at Rs 31,000-Rs 32,000/candy.

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Cotton lint up on demand in Punjab
20 Aug 2008 2:21 pm

Abohar – Cotton lint prices were quoted higher amid fresh demand from millers at major markets across Punjab Wednesday. However, sellers are not in a hurry to make fresh deals looking at the current higher rates.

In Punjab, cotton lint traded at Rs 2,800-Rs 2,815/maund at Budhaldha, Taapa and Rampura; Rs 2,790-Rs 2,800/maund at Malot and Bathinda; Rs 2,790/maund at Abohar; and Rs 2,780/maund at Manasa.

Cotton lint traded at Rs 2,700-Rs 2,750/maund in Haryana and at Rs 2,700-Rs 2,720/maund in Rajasthan.



New crop October full delivery was quoted at Rs 2,570-Rs 2,620/maund in Punjab and at Rs 2,490-Rs 2,515/maund in Haryana.

 

[rakeshmalik]

CHINA'S IMPORT TARIFF QUOTAS ON FARM PRODUCTS TO BE REALLOCATED

BEIJING, Aug 20, 2008 (AsiaPulse via COMTEX) -- The National Development and Reform Commission (NDRC) and Ministry of Commerce Tuesday released the Notification on Reallocation of Import Tariff Quota for Farm Products (the Notification) in 2008 to reallocate import tariff quotas.

The Notification said that ultimate users of wheat, maze, paddy and rice, sugar and cotton import tariff quotas, should return the remaining quotas to local development and reform commissions or commercial offices before September 15 if they haven't signed contracts for their original quotas or have signed contract for all quotas but are unable to deliver shipment by the end of the year,.

The NDRC and the Ministry of Commerce will reallocate the submitted quotas. Ultimate users who have used up their import tariff quotas are entitled to apply for new quotas for farm products from local development and reform commissions or commercial offices from September 1 to September 15.

 

[rakeshmalik]

New York cotton futures soften

NEW YORK (August 20 2008): Cotton futures closed softer on Tuesday on sales by small investors as an early rise in fibre contracts fizzled and the market seems in danger of slipping below the 11-month low hit last week, brokers said. The key December cotton contract shed 0.18 cent to close at 67.19 cents per lb. On Friday, the contract ended at 67.08 cents. Based on the weekly charts of the contract, that was the lowest finish since the middle of August 2007.

The contract moved from 67.01 to 68.05 cents. It was an inside day since the range was within Monday's 67 to 68.42 cents band. Volume traded in the December contract hit 7,299 lots at 2:37 pm EDT (1837 GMT). Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said the lack of follow-through buying plagued cotton.

She said the market "acted real lethargic" and seemingly could not get out of its way. Given the very modest volume, "it was a do-nothing kind of day," said Johnson. Fundamentally, most analysts feel cotton prices should work higher in the long-term given that plantings and output in most producing countries should be down sharply this season.

This should lead to a drawdown in stocks and help push prices higher in the months ahead. World 2008/09 cotton ending stocks are seen dropping sharply to 50.98 million bales, from 53.24 million, according to the US Agriculture Department's monthly supply/demand report. For now, analysts said cotton futures appear content to meander in mostly technical dealings that have little to do with market fundamentals.

Brokers Flanagan Trading Corp see support in the December contract at 66.60 and 65.65 cents, with resistance at 67.55 and 68.50 cents. Volume traded on Monday reached 11,145 lots, exchange data showed. Open interest in the cotton market fell 1,312 lots to 216,632 contracts open as of August 18, exchange data showed.

 

[rakeshmalik]

Bangladesh garment factories attacked by workers

DHAKA (August 20 2008): Some 200 Bangladeshi clothes factories have been attacked by workers pressing for wage rises since the start of the year, forcing some to shut temporarily, business leaders said on Tuesday. They called on the government to provide protection from future attacks.

"If the authorities fail to protect us, we will have to shut the shops which is completely undesirable to the owners, workers as well as the government," said Annisul Huq, president of Federation of Bangladesh Chambers of Commerce and Industry. "Without a stable law and order, security and dependable supply of electricity it will be impossible to achieve an expected 20 percent growth of the sector," he told reporters.

Anwarul Alam Chowdhury Parvez, president of the Bangladesh Garment Manufacturers and Exporters Association, said the attacks on the factories had been made by only a "handful of violent workers". He said the unrest happened even though a minimum wage of 1,663 taka ($25) for garment workers had been implemented in almost 95 percent of nearly 4,500 factories along with non-financial facilities.

Bangladesh's garment factories employ over 2.5 million workers, mostly women. But buyers often complain of poor safety standards at the factories, leading to accidents that killed hundreds of workers in recent years. Parvez said they were still planning to raise the wages "provided the government support us". He did not explain.

Bangladesh has been ruled by an army-backed interim government since January 2007. It took charge following deadly political violence that forced most businesses to close, with ports paralysed by a series of strikes. The country has since seen relative calm under a state of emergency. The business leaders admitted that prices of food and other essentials had more than doubled over the past year and a half, and said they were unable to help the workers much.

"Day by day we are being marginalised, the margin of profit has now came down to a minimum level due to severe competition in the global markets," said Fazlul Huq, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). The BKMEA, a group of over 1400 factories, early this month announced a 20 percent wages hike for its 800,000 workers to help them cope with rising food prices, ahead of the Muslim holy month of Ramazan.