WORLD SCENARIO:
The cotton futures maintained gradual rise from 72 cents a pound to 74 plus during the week. Major concern of the players were consumption rise from 114.51 millions bales to 115 million bales. India, which had been emerging major exporter is seen falling into negative arena while China was also expected to depend on imports as usual. The USDA supply and demand report, which was expected to show players a desired direction, failed to inspire altogether. China also depressed feeling as it said it would raise bank reserve requirements sending negative message around the world.
The futures as a result were keeping higher on outside grounds or move other way round. The three sessions on the NYCE were not steady rather futures fell or rose on one or the other count. The American exports were destined to go up as China had allowed imports. India, which faced depressed production had nearly given exporters particularly the US to take advantage of the opportunity. The US exporters were optimistic the latest report on export sales will show surge expected on Thursday. The week's feature was that cotton was doing on its own strength without support from outside markets, be that gold, oil or grains.
The impact of cotton imports by China picked up in December after wait for a fortnight and even more were positive. The imports surged 92 percent to 217,000 tonnes from last month. A recovery in China textile exports and lower 2009 shortage of the fibre led to futures rise. On Thursday the NY cotton futures ended easier on investor sales as the inability to hold its highs for the day induced market players to dump the market late. Robust US cotton export sales failed to inspire the market and weak technical picture in cotton will likely lead to further losses. The key March cotton contract lost 0.52 cent to close at 72.91 cents per lb, dealing from 72.22 to 73.80 cents. Volume traded in the March contract hit 10,635 lots.
On Friday New York cotton futures ended lower on investor liquidation before a holiday break and the weak technical outlook could lead to further losses next week. The key March cotton contract fell 0.83 cent to close at 72.08 cents per lb, dealing from 71.93 to 72.91 cents. Volume traded in the March contract hit 8,701 lots. "It (may) quickly go down toward 70 cents pretty good," said Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia. She said a key area of support could be found near 72 to 72.10 cents and a finish below that level would easily deflate fibre contracts.
LOCAL TRADING:
The opening session on the cotton market saw buying considerably down, may be due to latest report the production was nearly certain at 12.7 million bales. Earlier reports were just 11 or little more. Thus the spot rate was marked unchanged, phutti prices were down both in Sindh and Punjab quoted at Rs 2000 and Rs 2350. Some 6000 bales of cotton lifted in prices range of Rs 4500 and Rs 4725 per maund. The low activity was result of a wait to see market condition follow cut in exports of yarn to just 50 million kg per month.
On Tuesday buying activity was seen down said to be due to slashing yarn export, naturally therefore, the spot rate was also down by Rs 25 to Rs 4625 per maund. Only 3000 bales of cotton were lifted in price range of Rs 4600- 4700. Phutti prices ruled in Sindh and Punjab in range of Rs 2000 and Rs 2300. The spinners who have been asked to slash yarn export have been active cotton buyers. How long will this continue needs observation.
On Wednesday further Rs 25 cut was seen in spot rate to Rs 4,600 attracted buyers taking volume up to 10,000 bales in price range of Rs 4400 and Rs 4700. Phutti in both provinces ruled at Rs 2000 to Rs 2350. The exporters were away and the buying was sole contribution of the millers. The buyers were expecting further price fall as spinners and exporters had some reservation on some or the other account.
On Thursday modest business was seen as only immediate needs were covered. Spot rate was left at Rs 4600, while 7000 bales of cotton were lifted in price range of Rs 4500 and Rs 4700. Many textile exporters were out in Frankfurt Germany selling products in annual Hein Textile exhibition. It is hoped prices will be down soon and buying will go up. On Friday sluggish business was seen as mills were expecting more decline in the prices. The Karachi Cotton Association (KCA) official spot rate was lowered by Rs 25 to Rs 4,575, dealers said. Trading was thin in ready business as, nearly 3000 bales of cotton changed hands between Rs 4500-4650. Phutti prices in both Sindh and Punjab were same at Rs 2000-2350.
On Saturday prices maintained firmness as mills gave up the hopes of more fall in the rates and finalised the deals at the existing levels. The Karachi Cotton Association (KCA) official spot rate was unmoved at Rs 4,575. Cautious buying was seen by the mills as most of them were trying to cover the near-term needs and some were still hoping that prices may come down due to better crop. Under the circumstances, it is very difficult to predict about the direction of the market, but it appeared that the prices may not fluctuate sharply in the coming days.
CURB ON YARN EXPORTS:
The cabinet committee on textile has taken a decision to restrict quantum of yarn export to 50 million kg per month for the remaining six months of current fiscal year. But the spinners demand to provide two percent rebate, as relief was deferred by it. The experts expressed that the high anticipated production couple with restrictions on export are likely to stabilise the prices for the local industry that has recently been pushing the govt for banning exports of yarn. However, the government who has to bother about growers who are generally losers when some row corrupts, kept watching the situation until formation of a panel the near war condition should come with the decision.
The statement, however, to the effect that two textile partners will now begin work to benefit this country and economy. However, the decision is not in line as free market mechanism should have been in view. The authorities should have done to bring in fore ethics by quarrelling parties to sit across the table and decide in their best interest and in the interest of the economy.
One hope heart burning should have come to an end, which is unlikely. The coming days should speak rather loudly the dust raised above head has now settled and all have started working to earn forex for the country. The economy is in very bad shape. A movement created unwillingly may or may not yield the desired result. Enough loss seems to have already accrued during the couple of weeks. There is still time a right decision is made to settle the old score once for all. The textile sector should get its mills worth of feed so that exports are not held up on this account.
Quite a few industrialist have left country saying the condition is not good at home while, some quote, BD, Jordan and some other countries offer better grounds and work in peace. The situation demands government ensured ground so that the gradual switch over to some other countries is restricted.
LOW COTTON PRODUCTION IN PUNJAB:
The Sindh has grown record cotton production should sound heartening for people who have been versed to observe imports of billions worth cotton every year. What's the pretext sound as hurting as is heartening to hear production rise in this country. The government has given this gift, which should be respected and used in improving the economy and country.
The farmers association of Pakistan (FAP) has time to time voiced for the benefit of agriculture and growers of cotton. The FAP demand that Punjab will grow less cotton this season, while Sindh has created history is very vexing. The agriculturists who questioned the five percent low cotton production in the Punjab was due to high temperature and severe attack of CLCV. They charged that authorities imported once again contaminated, untreated and sick Bt cotton.
They said soil, temperature, atmosphere and environmental conditions of Punjab are different from Sindh, therefore, untreated Bt cotton is not suitable for sowing in the south Punjab's cotton growing districts. The leading growers rejected the one-sided assessment of food and agriculture ministry and went so far as to demand that it must be investigated who allowed sowing of the untreated and unsuitable seed in Punjab and schedule of water release in the Canals for irrigation.
They pointed out Sindh achieved a record cotton production of 4.12 million bales against target of three million bales, while cotton production in Bahawalpur, Bahawalnagar and Rahimyar Khan showed lower production of four million bales to three million bales. They held shortages of water release responsible for the plight.
WTO HAS OTHER VALUE, TOO:
The WTO was once heard in Pakistan when it okayed draft in Morocco. Then it was recalled for being a lengthy document to go through it and make out anything and last time when some enthusiast took upon himself to make interested quarters understand the sum total was global trading organisation had much constraints but ample opportunities.
Later it was communicated through whispers people were sifting through opportunities. And now a report says the capping of yarn exports may be taken to WTO, probably to stop cabinet committee decision. Poor WTO, which had banged in into nook and corner of the world it perhaps never had a hearty "smile", is struggling to survive, since Doha round 2002.
However, while nobody is sure WTO will see the dawn of meaningful life, those who are in forefront to give it life in original shape has been heard suggesting let WTO be reach people in but in regional shape. When the body in dilemma Pakistan's are mulling to approach WTO reconciliation body to get fair deal, that can help Pakistanis by telling them nothing except that they are right.
The fact is that free trade mechanism has been ignored, which will make WTO task easy. The yarn exporters are no doubt in a win-win position, be it WTO or any organisation. Besides, if the government ban imposition is said to be not lasting for all times to come. Rather, after six months the ban will legally go. Under the circumstances, sources reminded their mutual consultation with Pak economy plight in view to reach agreement.
They pointed out any constraint or dispute should be solved keeping ethics in view, which is the best way for Pak exporters or even businessmen. As, they said, who knows Pak economic condition in its worse than businessmen and manufacturers and exporters. The yarn exporters and textile exporters should not have persisted so long, and sought government help instead of a mutual accord.
COTTON PRODUCTION SEEN AT 12.7 MILLION BALES:
The CCAC of the Minfa now sees cotton production at 12.7 million bales against projected target of 13.3 million bales. This is below the consumption Pakistan requires for its textile industry. Pakistan needs 15 million bales to feed its textile sector. If this figure is taken as the final, according to the meeting held to review the cotton crop projection during 2009-10, Pakistan will need to import three million bales of cotton. Around one million bales of cotton are likely to be exported.
However, the figure changes with the slight attack of pests. The various observers thus fix likely production at 11.5 or 12 million bales. This sorts of odd figures will not be avoidable unless one body-take it cotton crop assessment committee of Minfa, a responsible and near correct figure will remain in lurch. How cotton prices fluctuate often market men left aghast but they have to bear the rise and fall in prices.
The correct or near correct position of cotton crop is essential for checking unnecessary cotton import from abroad if as CCAC gives us to believe that three million bales will have to be imported, who will give the amount to cotton textile sector who earns for the country. The growers have been often found illusion whether to continue cotton growing or move to some other fields for more return. The growers often have to burn cotton because consumers opt for importing on grounds that quality cotton was not available locally why importers resorted to imports.
In this case, too, who is going to confirm the imported cotton is better from quality point of view? No one but government if it wants nagging to end from cotton and textile sector, some impartial "army" of knowledgeable should be with the government department. After decades the textile sector or agriculture as a whole considered to be backbone of economy is giving a serious thinking so that unnecessary hue and cry is avoided such as one is rampant today. Who is in government department to lay hands on right call given by the spinners and value-added sectors?