Higher dollar value provides impetus to cotton trade, lint, spot rate almost stay put
KARACHI (August 25 2008): All round easing in business and trading, buying on cotton market, too, has surged. The dollar value is helping, falling out is friendly and export orders are in hand. The spot rate was initially unchanged but phutti and cotton prices registered gradual decline. The spot rate failed to hold on and was reduced by Rs 125 on Wednesday but on Saturday it was again raised by Rs 100 to Rs4125.
WORLD SCENARIO:
Cotton futures fluctuated both ways on the NYCE as trade and investors indulged in buying while small investors indulged in selling to escape losses during the week.
On Monday December contract managed a gain of 0.29 cent to 67.37 cents a pound. The march was also higher by 0.25 cent to 72.59 cents a pound. On Tuesday sales by small stakeholders led to softening of the futures. The market is in grip of fear that futures were in danger to slipping below 11-month low hit last week (August 11-16). The analysts however felt cotton prices with strong fundamental should work higher in the long run. They presume coming years ending stock will fall sharply-from 53.29 million bales to 50.98 million bales.
On Wednesday futures surge was marked on the NYCE as they were driven up late during trading when a dive below key support to lows dating back a year sparked new buying interest. The December contract rose 0.91 cent to 68.10 cents a pound.
On Thursday futures fluctuated with big margin, backed by other factors. However, oil prices did not touch with certain extent of impact. Against Thursday cotton prices in New York looked backward, owing to most grain fluctuating lower like corn, sugar wheat etc such impact on commodities are witnessed when dollar surges for the last few days, it is rising, most people believe owing to lowering of oil prices.
However key December contract on Friday shed 21 cents to 69.63 cents a pound. However, market sources are hopeful that prices would soon consolidate, and, under certain circumstances even gather value.
LOCAL TRADING:
The oil and consequently slide in dollar rate has been helping local cotton prices and consumers who pounced on the market to lift nearly 13000 bales under pressure of import orders. The spot rate was unchanged while phutti and ready cotton prices softened. Besides oil and dollar slide in local markets, expectations that cotton production may register rise and seed cotton inflow into market will surge, cotton prices are also likely to come down.
The prices as a whole are keeping within consumers exports parity. With the ease in political tension nation as a whole is some what relieved. On the government level, considerably better opportunities seem to heave been opening up. The orders in hand for textile exports for X'mas days have brightened. The coalition is upset to some extent but authorities should be considering to concentrate on business and exports.
On Wednesday buying support scales were up as KCA scaled down spot rate by Rs 125 to Rs 4075. The phutti prices came down in Sindh to Rs 1825 and Rs 1850. The same rate Rs 50 was also reduced in Punjab that placed phutti rates at Rs 1700 and Rs 1900. The ginners, whether they like or not, are under pressure to reduce lint prices owing to immanent rush of phutti supplies soon. The market was however closely watching and praying return of normalcy in the country so that exports are geared up.
On Thursday expectations that cotton production was likely to be somewhere near lumber and phutti supplies would pace up, spot rate was again brought down by Rs 25 to Rs 4025. Buying support was seen to rising level in price range of Rs 4000/ Rs 4050. Rising dollar value is encouraging textile manufacturers and exporters to prepare for higher sales aboard.
On Friday rates were seen building and buyers could not keep passion in check taking for granted expedition phutti supplies to hit ginners courage to continue lower. But slight rise in ready was marked, the buying size continued to be high at around 12,000 bales. In Sindh phutti stayed put but in Punjab rose to be quoted at Rs 1800/2000. The cotton growers are learnt to have been taking steps to keep pest attacks at the minimum.
On Saturday upward trend continued on the cotton market. The official spot rate was increased by Rs 100 to Rs 4125 in a single day rally. In the ready business the prices of phutti came down modestly at Rs 1875-1925 in Sindh while in the Punjab rates were higher at Rs 1900-2025. In the absence of political stability, businessmen are confused before finalising any future deal. About 8000 bales changed hands within the close price range of Rs 4150-4200.
UPGRADATION FUND:
Saving money for bad time comes to mind of those who wish to stay tougher against lurking weaknesses. Besides, this there were resources enough to save for rainy days. In this country saving rate is said to be lowest in the world, or at least, than the regional countries.
One thing however is observed that vote hungry rulers remain under pressure to meet demands of businesses and exporters considering sale proceeds will fill the exchequer sooner or later. But several unethical deeds deter coffers to ever been respectably brim. The above for the circles who have been observing economy's plight for the last six decades commenting on demand by textile millers to set up upgradation fund may not create appeal among officials who keep nagging about collections of various types. They also had in mind as to why textile millers begin, may be in an humble way and then look elsewhere for help. They also asked weather it is late.
They thought the fund should have by now been in operation as conditions do fluctuate on local and international grounds. So a small strike should not dis-balance things like exports.
Unfortunately, cotton the gift of God has not been properly treated in Pakistan. There is hardly any human effort to beautify and standardise products meant for local and exports purposes. Cotton, fine or otherwise untrained skill give some shape which naturally compete with regional countries which has set up wherewithal to attract importers who always are keen how best to supply textile products to sell like hot cakes. Among basic thing a few are textile machinery, dyes and chemicals made locally. The nagging that is always heard here along high cost of doing business, while others rob our established markets, why SBP has asked banks to remit over due export proceeds within 15 days?
OVERDUE EXPORT PROCEEDS:
The government machinery looking after its interest was expected to be watchful of development around the world to keep working in business and exports upright. The country has been passing, it will not be proper to say today, through bad days as it has always been so after elections. Those who have lived to see this country a prosperous country have always found void of things that inject satisfaction.
The other day, the SBP has asked banks to remit overdue export proceeds, which may be in overall context and not with the latest, development. A report on August 17, 2008 headlined delays in ships arrival hurting exports and hence proceeds remittance to delay. The background of the fact is that shipping lines calling at the Karachi and Port Qasim ports have informed exports that ships arrival schedule has been disturbed owing to heavy congestion at the last port of call, in this case congestion at Jebel Ali Port and Salah Port. As a result small vessels carry goods to Pakistan.
This unnecessary bother could be tackled if in 60 years ports in Pakistan were made large enough to handle large vessels. It is not clear why Gwadar Port which can handle large vessels is not being used or the other ports capacity increased. Look around and disappointments abound. In 10 years democracy has been talked for whose benefit and developments have been ignored-simply ignored. The top sector of the country-textile sector has been left all through decades to spend on textile making machinery, dyes and chemicals, the result is drain of billions of dollars on their imports. Democracy has come when self sufficiency will come to this land, generations who will line, see!
SALVAGE LOSS IF POSSIBLE:
New moves are on, if implemented honestly the economy will be different what it has been in the last over one decade. Cement and sugar already being checked, and will soon offer relief to the consumers. The textile sector seemingly is in trouble, as according to apparel exporters the government has not yet issued SRO regarding Research and development (R&D) support despite approach made a fortnight back to this effect.
The exporters in an interview expressed that the silence has discouraged the foreign buyers. They fear the importers may have been contemplating to take their orders back as according to exporters buyers were hoping prices at competitive terms provided government R&D support was forth coming. The exporters have been seemingly had been assured an SRO was issued providing R&D support but the wait has been too long to hold orders valid.
The apparel sector fetches highest price per unit. The apparel exporters apparently anxious as they had been preparing for the exports expecting R&D support, which creates edge against the immediate rivals like China, India, and Bangladesh. They regretted that politics apparently seems to have taking toll owing to probable postponement of the meeting between ECC and Ministry of finance to decide the matter. Even exporters have quoted the dates August 12, and a postponement made them apprehensive that apparel sector was head on faced with problems in dealing with their certain buyers who had placed orders and in the absence of R&D support.
The textile sector has continuously on the decline and in the absence of any incentive from the government for want of resources and political will the economy and country will further get hurt. The exporters, however, should try to be as free of government support as possible in the absence of any export sector to stand in textile sector strong support.
WTO JULY MEETING FOUNDERED ON CALL TO HELP FARMERS:
Of course, some were pessimistic about the much flower-showered July last meeting of the WTO in Geneva, but some had used words like "now or never". They were not mere some, but were top participants of the 153 members of WTO, who unfortunately were not believers in polluted philanthropy.
Since 2001, so called Doha round, has consumed precious time and money on picking words from dictionary which they delivered during discussions in the hope that thus they could mislead the poor. The last Geneva meeting proved utterly futile despite appeals to bring the streaming debate to a logical end. And now the World Bank chief who actually has added to his one or two feeble voices to made another louder bid said in a statement the other day that the July meeting, which foundered on a proposal for a safeguard to help poor countries withstand a flood of imports, had left a good package of results on the table "And that it would be a mistake for the world economy and harmful for developing countries not to retrieve it."
The world rich never had kind feeling ever through centuries for farmers (poor), the sudden outburst of human feelings drop dear hint that WTO was not planned to offer relief to poor but for whatever was left with the poor. The logic is quite simple. Why an organisation buttered on two sides of the bread was divided into three major divisions - the LSCS, the emerging developing countries and rich or developed countries? May be tons of milk and honey quoted words are minted as long as reservation to keep certain percentage of right to release subsidy money to enable their to excell farmers of poor countries, and monopolising technologies won't make global two-way trade free!
MINERAL OIL IMPORT DUTY WAIVED:
The taxes and duty ultimately reach on door steps of every Pakistani who pays or otherwise in the shape of roads, transports and cheaper stuffs of daily life. Unless government is honestly paid development remains in as bad shape.
Most of the pesticides required for enhancing agricultural products are imported. The imports are paid in forex that is earned somehow. The reports are always rife during rainy days that cotton, wheat or sugarcane plants have been attacked and then farmers go to every shop where pesticides they acquire is available. Quite often hoarders return customers saying the required pesticides was not available. Or, on persuasion agree to sell at much higher rate.
Last cotton season (2007-2008) the mealy-bug damaged considerable cotton plant, necessitating twice to reduce the target size to just 10.1 million bales and 40 lakh bales were imported at rupees one billion. The report is clear that there are dealers registered with the plant protection deptt as importers, formulator and manufacturers of pesticide. But all they needed was to eliminate duty in this case Rs 5. The govt has done so in good faith, hoping mineral oil will be instrumental in improving the efficacy of pesticides.