First-ever peaks observed: lint at Rs 4300, spot rate at Rs 4150
KARACHI (August 04 2008): Both the buying and selling was witnessed on the cotton market despite firmer condition prevailing as world reports about cotton predicting lower acreage during coming seasons. Historical rise was seen in spot rates at peak of Rs4150 on Saturday from Rs 3900 on Monday and in ready off take price touching a record Rs 4300 per maund.
WORLD SCENARIO:
Fluctuations both ways were marked on the NYCE trading, investors sales and purchase making the major players to wait for inspiration filled news, which offered a look one could move on.
On the opening session the Key December cotton futures conceded 0.65 cent to 73.85 cents a pound. The players were least happy with the development and sought inspiration from ample rain fell in India's cotton growing areas. For the first time the traders were also keeping an eye on development in talks over WTO. Which if struck will have positive impact. Analysts feel cotton is looking more bullish over the longer-term because ending stocks are shrinking due to lower supplies during the 2008/2009 season. Some are hopeful cotton will rise to 78 cents again. Provided bad news spread out of cotton growing countries.
On Tuesday shedding impact of corn, which was generally lower, cotton future rose substantially December being higher by 0.63 to 74.48 cents a pound.
In the Wednesday session, however, futures settled lower as small investors indulged in selling. The traders looked pretty disappointed for missing position and clear direction. Analysts feel cotton is looking bullish over the longer term because ending stocks are dropping.
On Thursday cotton futures closed almost unchanged as market was looking out for inspirational news, which could offer a direction. The players are now waiting for supply/demand report on August 12. The leading analysts commented on the situation saying that cotton may just be content to drift and look to next month as the start of 2008-09 marketing year gets underway.
On Friday profit taking by investment fund pushed futures slightly lower. The august 12 report is considered may inspire trading. The report traders said is vital because it is the first detailed look at major crop like cotton in 2008-09 marketing years. The industry analysts seemed cotton would probably grind higher as supplies were tightening and ending stocks will likely be lower.
LOCAL TRADING:
The week under review had usual record breaking price at Rs 4300, as the reports coming indicate that most of them are going for crop ensuring better return. The manufactures and exporters of textile products had always been nagging about high cost of doing business, for rhyme or without. The growers and ginners lately unnaturally put under pressure and victimised for a couple of years linked their produce with foreign prices and quite lately had lost interest in listening to dictates of authorities and consumers for growing such and such quantity.
The imports of cotton have been rising showing for one or the other reason lack of interest of the buyers, government was reported to allow export of cotton, earning rupees one billion. Thus the textile exporters who are addicted to hinge on cheapest available raw material are likely to give way to some knowledge based exports. That textile exporters will be prone in future to listen to reason and be more interested in ethical values in their business was unlikely.
However, bullish sentiment had continued phutti gained Rs 50 to Rs 2025 and Rs 2075 in Punjab and Rs 2000 and Rs 2050 in Sindh. The uppish trend was stated gradually contracting supplies. The rates in ready were Rs 4250 a maund, the higher in Pak history. Nearly 6000 bales were done on the first trading day.
On Tuesday phutti shot up to Rs 2050 and Rs 2100 in Punjab, while in Sindh with Rs 25 rise seen at Rs 1975 to Rs 2000. The total buying despite couple of bales changing hands at Rs 4300 was seen over 6000 bales.
On Wednesday spot rate went up by Rs 75 to Rs 3975, while a deal in ready was seen at Rs 4250 owing to low supplies and rising lint demand. The phutti prices in punjab were unchanged, while in Sindh modestly higher trend was marked. The market operators were deeply surprised at the trading though rains were seen by all as beneficial to production of cotton so far. Change of hand was seen around 6000 bales.
On Thursday there seemed no respite in price hike as the spots rate was pushed higher at one stretch and rates in ready were marked ruling between Rs 4190/4250 per maund. The spinner and millers have been regularly visiting market and lifting lint as ginners seemed determined to go on strike obviously stopping supplies. Nearly 2000 bales in small lots changed hand'.
On Friday spot rate was up by Rs 50 to Rs 4100, while some 5000 bales changed hands. Meanwhile a couple of factors were making cotton consumer run and buy/lifting cotton without least reservation about prices. The rain factor was making apprehensive, as heavy down pour restrains supplies. Besides ginners were firm in decision to stop ginneries and stopping supplies until their demand was met.
On Saturday first-ever rise of Rs 250 was seen in the official spot rate during the week, which is historical in the cotton trade. The official spot rate upward trend was maintained for the fourth day in a row, raised by Rs 50 more to Rs 4150.
According to the market sources, panic buying of cotton caused the unrealistic increase in the prices. Some 12.6 million bales of cotton are expected for the current season. Despite this the country may need to import nearly 4.5 million bales of cotton, which will cost a huge amount of 125 billion dollars from the foreign exchange reserves. In ready business volume came down to around 1500 bales in the price range of Rs4150-4250.
TAKE THIS OR THAT MUCH SAYS NO ONE:
With so much issues staring in the face authorities must have been struck by mind boggling. How to resolve one after another to place economy and country on road to progress. More particularly when the voice from all round was coming give this or that much only then gloom would be replaced by bloom. The ginners who hardly voiced not in long distant past have also are tightening belt, textile sector is asking to rationalise oil and gas cost and pay is in friendly country trying to get assurance so that path of recently built democracy in this country is made smooth and workable.
Not too frequently seeking help Pakistan Garment Manufactures and Exporters Association (PRGMEA) has turned addict and is along with others calling for one or the other facility to ensure edge for export of products, which fetches highest amount against such exports as cotton and yarn. From the country of abundance as a sequence to PM's visit has streamed down news that food can be expected in Pakistan to save population from facing hunger and death.
There is little doubt that large scale investment in various fields, particularly should have been reminding US Administration to be generous in more lucrative trading partnership rather than aid, such as liberal imports of garments, Knitwear, bed wear, towel etc from Pakistan at good terms. The reconstruction opportunity zones in areas where as an alternative to live in comfort and peace are with arms in hands. The move is one way, it is hoped the requisite funds will start trickling down before PM is back home.
ABOUT WTO WITH HOPE:
The writer had held out an assurance to readers to pour sweet words about WTO, which 35 torchbearers had been discussing and, sharing with each other it was doable and signs of give and take were visible. The signs of give and take were never given in concrete terms, the reasons, sources commenting on the delay from 2001 November till date was that behind the scene philanthropists calculating not how much they lose but how much poor gain. The moving train thus comes to halt at this point.
A very important member had the other day courage to say his country had decided to give "more" but not beyond this left 150 other members non-pulsed. Following this India's Kamal Nath showed his willingness to concede more ground but before that he wanted to see what was being offered by rich country with wealth to those for whom WTO was primarily conceived. The meetings being held these days are crucial and time is more so as George W Bush will be out of White House in four months time. Then who can predict WTO survives or turns a memory of the past.
One thing, however, is a burning and disappointing reality that world scale organisation have never stood for removal of poverty and destitute. The way these have stood for the majority to justify democracy and more to quench the nasty thirst of their designs the world has shuddered but overawed prefers to keep silence to escape worse. The final words are yet to come across continents whether poor had to concede more than rich or vice versa. (the latest reports say the meeting ended without taking any decision.)
AN ANSWER IS DUE FROM LONGEST SERVING INDUSTRY:
Every industry manufacturing one thing or the other boasts of saving billions of dollars drained for meeting export needs. But nobody seems least concerned about textile sector and other export sectors spend billions on imports of machinery, dyes and chemicals. There are some whose services are indeed praiseworthy as far as saving some, which if would not have produced would have to be imported. No body is absolutely clear or at least wants to be clear of keeping from problem away when desperately approach people who keep an eye on the ever-sinking economy and exports of Pakistan.
With dire expression of regret they almost all agree to the fact that country like Pakistan where God had gifted with vast potential why it is by all accounts a dumping ground for leading exporters of wide varieties of stuffs that can be purchased from Rheriwalas to most modern shopping malls of Karachi, Lahore, Peshawar and Quetta.
They lift a hanky or shaving stick and they will certainly not been bearing made in Pakistan certain companies have long years of service without which Pakistan would have been poorer. But why have not they ever thought there certainly are ways to make this country richer than it stands now. It is not ever categorised as emerging developing country.
Certain supplements, strictly speaking petro-chemical industry, which speak developed countries in the East or the West are but for the importance attached to the petro-chemical industries. Unfortunately this country by some interested quarters that are deliberately keeping at bay openly saying all developing countries one day had seen uncertainties like the ones Pakistan in sunken in.
Not all the sources are ready to take for granted that Pakistan will linger on like this for one year to reach the level of developed countries. Which walked along Pakistan some 60/70 years back, the S Korea Singapore Malaysia even Indonesia are far ahead of Pakistan. Is there anybody to vow grate leap forward by Pakistan?
GINNER'S INDEFINITE STRIKE THREATE:
Last week that ended on July 26 threat from ginners to strike unless certain demands were met had in it both chances of being rewarded or otherwise. As silence was maintained by authorities owing to multiple issues facing the country. Point, however, is that issues may be less important or more cannot be left unresolved. The 1200 ginning units are supposed to be inoperative unless government listened to their grievances and done away with the problem. The severer threat has come to go on indefinite strike showing clearly authorities have not attached requisite attention and led to anger of the ginners.
The textile sector has been going down with passage of time rather than should have proved what the world had considered its worth. Cotton was God gifted wealth, which the consumers squandered away without knowing they were so doing. From day one cotton offers by ginners was of substandard quality, or asking prices would be much higher than cotton was available elsewhere. The purpose was to keep growers and ginners under pressure and if they refused to submit to consumers will, according to free trade policy cotton import reached four million bales.
Supply and demand may be modern theory applied generally but seen intently it lacks ethics, which does not exist and has bewildered the traders and men in business. The causes have been discussed in previous review and being left out for fear of unnecessary repetition. The silence on the government's part is understandable. For the last six decades investment is avoided as long as tax payers money could be acquired enjoying political clout, which lies left and right of traders business and exporters. The sources close to trade and businesses said adding that either authorities should forget favours for all favour seekers, keeping in mind the ill health of pale economy and the very survival, God forbid.'
COMMON MARKET:
The call that Muslim countries should establish common market is a regular affair after passage of few months. The exercise seems to keep somewhere in the corner of mind so that some bold took stringent measure rather than giving mere call to set up a common market. The dream has abundant substance as it has a market of over one billion and two way trade and at times aid could make Muslim countries cheerful and their muscle showy. Dozens of countries, some with abundant raw materials and some with mineral products and oil have the potential to supply food and textile products to look nations respectable.
It is surprising for many as to what stops Muslim countries to set up one such body like European countries have. That shows their oneness and prowess, which Muslims don't have. "The Mashhad Chamber of Commerce Industries and Mines president stressed the other day the need for establishment of a common market of Muslim countries as they have potential to fulfil 90 percent of their needs on their own." One wishes the fact dawned on Muslim nations!
