WORLD SCENARIO: The NYCE remained closed on the opening day, Monday, on account of US President's Day. But when market closed at the week-end the futures were resisting decline. However, when it reopened on Tuesday turned sharply to a near 4 1/2 month high as speculative buying lifted prices through buy stop orders placed above the market.
The most active May contract gained 1.95 cents a pound to end at 49.43 cents a pound. March registered a rise of 1.71 to 48.25 cents a pound. However, mixed trading on Wednesday caused futures to slip on hope that support enhanced consumption and recent switch trade were bound to influence the prices.
The following day, that is on Thursday, the futures had to face adverse situation as exports were down owing to largest cotton importer China was out of market until the Lunar New Year holiday was over.
The trade waited eagerly for the USDA report regarding sales, was delayed by one day would be out next day. The brokers predicted that US net upland cotton sales will range from 225,000 to 250,000 RBs 500 lbs each.
Commenting on the USDA report, analysts said that even if the sales noted with slower pace, they anticipated China will be in the market and will buy aggressively. If it did not purchase now the chances were that futures would rise. Traders were jubilant on news that China was likely to import 14.5 million bales in the 2005/2006, much higher than trade had expected, USDA projected at the week end.
Analysts said China's total consumption is likely to rise by nine percent to 41.2 million bales. Meanwhile March contract rose sharply on weekend trading owing to fund and option related purchases boosted the market which took March to 49.25 cents a pound, said to be the best level since October 7, 2004.
LOCAL TRADING: The ginners have developed bullish perception of market and edging up asking prices, which of course, consumers were reluctant to accept. The spot rate was firmer and rates in ready were ruling Rs 100 higher to Rs 2250/2275 spinners and textile millers understand they cannot avoid cotton buying for long. Phutti is turning scarce and dearer and quality cotton is hard to get.
This was the background when trading resumed on Monday and a single known deal was furnished. Spot rate held to weekend level at Rs 2175. The ready prices ruled at Rs 2250/- and Rs 2275 per maund. On Tuesday nearly 3000 bales of cotton changed hands which millers could not avoid. They have been vexed at the rising cotton prices and falling quality.
The ginners claimed they have been paying Rs 25 more for phutti. They have raised the asking price for cotton despite textile millers had openly opposed. The spot rate was left unchanged at Rs 2175 while deals in ready were priced around or a little more than spot rate.
On Wednesday cumulatively phutti prices rose by Rs 75 which in Sindh and Punjab were Rs 950 and 1075 respectively. The rise - this day was Rs 50.
The rate in ready went up to be registered at Rs 2300 at which price few deals were struck. Exporters lifting sporadically were not seen obviously to avoid further stocks presuably not acceptable to the importers. The futures in New York are surging naturally influencing the cotton traders in Pakistan. Thursday's session was not different from a day earlier.
Spot rate was upped again by Rs 25 to Rs 2200, showing for certain that rates in ready won't lag behind, ginners raised the asking prices at Rs 2250/2300. The phutti was selling in Sindh and Punjab at Rs 925/1100. The spinners are preparing to buy offered lots as PCGA fortnightly statement on arrival is not expected to favour the consumers.
On Friday ready price jumped to highest one day gain to Rs 75 to Rs 2275 owing to spinner and textile millers on perception of further rise. It seems next week's PCGA report will depict low phutti arrival. Phutti prices stayed put at Thursday's level that is Rs 925 and Rs 1100.
In ready prices in Sindh ruled Rs 2000 and Rs 2350 and - in Punjab the same ranged between Rs 2000 and Rs 2400. Around 5700 bales changed hands. Saturday's business remained in the same range as that of the day earlier.
EU HARDLINE? The patron- in- chief of the Towel Manufacturers Association (TMA), SMA Rizvi has fathomed the psychology behind constraints with the EU according Pakistan duty free access or facilities offered to textile products exporters of other countries. He appears vexed at the chain of visits by high ups from Pakistan for talks about anti-dumping duty imposed on Pakistan or GSP plus.
He in a recent statement stressed a change in strategy and demanded if the developed nations were not willing to give duty free access across the board, only those items which do not hurt their industry should be picked up for negotiations. He observed that despite the fact that Pakistan imports 90 percent of the textile related machinery and, according to him, Pakistan imported latest looms, dyeing plants and other machinery related to towels from EU at a very high cost which benefited engineering industry of that EU's member countries.
Rizvi understands that exports of towel have great potential in EU member countries without much ado about anything. Therefore he urged Pak authorities should take additional interest to promote their exports.
In a separate statement Hosiery Body Chief Aslam Korsaz suggested that talks with less developed and poor countries should be approached for greater gains instead of hankering after rich once. He reiterated that only textile and clothing materials should be negotiated rather the entire sector, with which the importers are allergic.
The EU member countries should be convinced that from exports from Pakistan their own industry is not at stake. He hinted and rightly, so that competing textile exporters should fix per unit price which must not vary too much to avoid inevitable losses.
RESERVATIONS, WHY? The textile workers get lowest wages in Pakistan according to an international survey conducted by the world renowned consultant Werner. This appears one reason Pakistan textile exporters have been able to compete with products of other countries, circles said adding that it will be misnomer to dub so only the textile exporters.
They were commenting on a report published recently. They, however, said the report has clearly furnished figures showing Pakistan worker getting 25 to 30 cents an hour. Indians get 50 cents for similar time period and in China they get 45 cents. The survey says Pakistan pays better only as compared to Bangladesh and Sri Lanka, the noted LDC.
In Thailand workers get one dollar, in Turkey two dollars, $24 in Switzerland, Denmark 23 dollars and Japan 21 dollar per hour. Some countries' government's offer employees social security nets including unemployment allowance, healthcare facilities and free education for the children.
In Pakistan survey mention old age benefit scheme, which is so much riddled with bureaucratic rigmarole that a worker hardly gets any benefit.
Only on February 1, 2005, a committee with three federal ministers has been formed to mend labour laws and fix wages on hourly basis. Before the committee gives its verdict, it is pertinent to note that Pakistan textile exporters recently showed upsetting attitude as to why Pak exporters were singled out, against India and China.
It is known how much social compliance is not elsewhere, but overall Pakistan appears to be the target. No one in textile sector was ready to confirm or reject the above contention.
The report was very recent and hence some expressed inability to talk on the issue. However, sources hoped things will be clear soon particularly situation will change after the committee comes out how much better condition is likely for the textile workers in future.
NEW COTTON VARIETY: The cotton variety evolved by CCRI, namely 496 is likely to go down in history for longer serving and disease resistant, a report said. The variety CIM 496 has been in use with other varieties for six years and its utility has been proven before informal induction after over a decade under experiment and sort of trial production.
The attempt to evolve a variety disease resistant was made by the Central Cotton Research Institute (CCRI), Multan, following devastating effect caused by CLCV about a decade back.
Secretary Minfal those days Dr Zafar Ahmad, took the challenge earnestly and engaged then head of the CCRI Dr Zahoor Ahmad, who proved his metal and evolved a variety that will create history in giving Pakistan high yielding and pest resistant variety, has subjected a number of varieties in use to be subsequently banned.
Out of 42 cotton varieties nearly 23 varieties have outlived their utility and been declared scrapped from future application. The cotton growers disturbed to the core from vulnerability of some varieties to various pest attacks leading to crop failures quite often, including CLCV about a decade back.
The cotton growers courage after CLCV attack, which practically ruined them and was brought under control after hectic efforts, as left over roots and parts ruined crop causing resurgence for a couple of years.
Today, contributors are brimming with hope that CIM 496 will revolutionise cotton production in Pakistan. Increased consumption claim by textile sector should be happy over the contribution which would cater adequately to their future need.
TAIL PIECE: Cotton prices are looking up as consumption are bound to increase due to demand following WTO system set on work. Under the circumstances exporters should be careful to maintain quality of their exports and low price.