Conditional yarn export, new crop phutti arrival help improve trading on cotton market-Texglobe

KARACHI (June 21 2010): Late in the week cotton purchase began by the spinners and textile millers the activity unexplained whether decision of yarn exports or receipt of India over two lakh bales were behind the sales. The spot rate was down twice and last was seen at Rs 6400.

WORLD SCENARIO:

The world leaders and accepted economists are not clear about the health of global economy. Despite this USDA forecasts more cotton consumption at 116.07 million bales from 115.70 million bales. Every noted world leaders conference and meeting ends not without hurling caution or be ready to embrace the painstaking developments that acted to demoralise the nations.

However, the nations particularly the cotton growing ones are taking calculated risk to venture sowing cotton on more land than the previous year. The agriculture sector and quite often the manufacturing sector shows encouraging sings and soon picture gives the other side. The Indian cotton farmers and cotton growers in China are determined to grow more being almost harassed on acquiring cotton at higher prices.

The US is also on the higher side owing to avoid imports particularly from Brazil. Both countries have recently patched up differences, Brazil has been agreeable to neutralise the move by WTO on Brazil's aggressive complaints. The cotton like in the past in world moved under falling or rising value of dollar.

On Monday the NY cotton futures closed at a six-week peak on short-covering spurred by a weak dollar although some analysts cautioned the rise may be tempered by a large US cotton crop maturing in near ideal growing weather, analysts said. The key December cotton contract increased by 0.53 cent to finish at 79.47 cents per lb, dealing from 78.79 to 79.64 cents. On a third position basis, it was the highest close for cotton since early May. Volume traded in the contract stood at 12,194 lots. The spot July cotton contract added 1.02 cents to close at 82.56 cents, moving from 81.38 to 83.04 cents.

On Tuesday the NY cotton futures closed firmer after flirting with a six-week high, but players said the market may stay in a band until deliveries next week and a major plantings report at month's end, analysts said. The key December cotton contract increased 0.15 cent to finish at 79.62 cents per lb, dealing from 78.82 to 79.70 cents. On a third position basis, it was the loftiest close for cotton since early May. Volume traded in the contract stood at 8,587 lots.

On Wednesday the NY cotton futures closed mixed as switch business dominated dealings while traders awaited Thursday's government sales report, analysts said. The key December cotton contract added 0.08 cent to finish at 79.70 cents per lb, dealing from 79.33 to 79.90 cents. On a third position basis, it was the loftiest close for cotton since early May. Volume traded in the contract stood at 9,232 lots. Spot July slipped 0.20 cent to end at 81.77 cents.

On Thursday the NY cotton futures settled lower in another round of switch trade while most players looked toward deliveries next week and the release of a government plantings report this month, analysts said.

The key December cotton contract declined 0.28 cent to finish at 79.42 cents per lb, dealing from 78.69 to 79.84 cents. Volume traded in the December contract stood at 12,323 lots at 2:36 pm EDT (1736 GMT). Spot July fell 0.97 cent to end at 80.80 cents.

On Friday the NY cotton futures eased on investor sales and switch trade as players eyed deliveries in the spot July contract week and results of a government plantings report on June 30, analysts said. The key December cotton contract went down 0.47 cent to finish at 78.95 cents per lb, dealing from 78.29 to 79.47 cents. On the week, the contract was up a bare 0.01 cent. Volume traded in the December contract stood at 8,239 lots. Spot July increased 0.98 cent to end at 81.78 cents, moving from 79.84 to 82.37 cents.

LOCAL TRADING:

The textile exporters thanked God for new cotton arrival in the ginneries. They are thus ensured that cotton will be available as and when they will need most and quality not, as good but better than the remaining stock with the sellers. Meanwhile, reports containing good message such as export target has been reached with textile products doing equally well. The expected arrival report budged spot rate down Rs 50 to Rs 6,350 per maund.

On Tuesday arrival of new cotton crop streamed into ginneries slightly higher than the existing phutti prices. The ginners must have been under pressure with whatever stocks they must have. They are hurrying up to sell, indication can be had from outright deduction of Rs 50 to Rs 6350. The spinners and textile exporters misconception about them should be cleared because country and economy should always be in view, which is more important than individuals or groups.

On Wednesday another Rs 50 cut was effected in spot rate to Rs 6300, sellers bid to dispose of old stock as early as possible. Despite sellers bid, the millers were approaching countries with surplus to imports up to their immediate and urgent needs. The market sources were projecting standing crop as good, though agri officials are wary about pest attack seen in some Punjab fields.

On Thursday cotton spot rate was again raised by Rs 100 said to be due to some left over quality lint as good crop yield was trumpeted despite official warning to tackle of white fly seen in some parts. After over a week 5000 bales of cotton to Rs 6400 was seen changing hands in prices between Rs 6500 and Rs 6700 per maund. The quick rise and fall decision seems far from reality but to destabilise thinking of the cotton consumers.

On Friday KCA official spot rate was unchanged at Rs 6,400. In the ready business, nearly 400 bales of cotton changed hands between Rs6450-6700. Some brokers said that needy mills were active buyers to cover the immediate needs. Short supply of cotton boosted the prices locally and globally. But the mills are facing some difficulties due to higher prices, they added.

On Saturday the Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 6,400. In the ready business nearly 5000 bales of cotton changed hands between Rs 5300-6700, they said. Phutti from the Punjab was trading at Rs 2800-3100 and seedcotton in Sindh was trading at Rs 2700-2750 per maund, they said. Market sources said that trading activity will improve in the coming days as phutti arrivals have started but prices will remain stable due to quality factor.

PHMA:

The export sector contributes, little or more, to run this country and projects that help in turn export and yet more. They need prompt care if they are in trouble, particularly when crisis is not created by them.

In a report just published said a large number of PHMA (Pakistan Hosiery Manufacturers) voiced sever crisis like situation just because huge amount of their liquidity is blocked in the outstanding claims of drawback of local taxes and levies against which they have not yet received payment from State Bank of Pakistan. The value-added sector is already faced with as they have been trying to resolve for quite sometimes any crisis, like the one is in view will damage exports beyond repair.

Authorities are definitely worried over trade deficit and they don't further wish to deteriorate the situation from existing one. The situation as exists today is that besides confronting stiff competition from regional rivals in the absence of duty free access in European countries and the US, is frequent load-shedding (which seems to be relaxed until September), high utility rates, sales tax refund claims, non-availability of cotton yarn (at double of price, deteriorating law and order etc. The holding back of genuine claims of the value-added textile exporters by SBP is bewildering. But the cause that has given ground to hold payment has not been given, which is all the more vexing for the sector.

However, authorities will try to locate the problem as some hitch somewhere will emerge. The search for the ground factor will surely pave the way to a solution!

EXPORT TARGET, WILL IT REALLY SURPASS?

If exports go beyond $18 billion, it would not be much of a surprise. When Pakistanis are in deep strain, they out perform leaving countrymen and the world simply thunder struck. The war with a neighbour when thrust. Pakistanis refused to show back. For the last several months, one after another, hurdles blocked exports way but the report in hand proves target of exports will not only be achieved but roar pass the hope of authorities who were warding of whispers from relevant people that was marking it as optimistic.

However, since it is on record that during the nine months of fiscal year 2009-10 had exported textile and garment products amounting to $8.516 billion. According to sources apart from textile goods, the developing sector and non-traditional items exports also played role to be reckoned with. The way two sectors of textile exporters were at odds, any wonder was not in view but what report has said is no less.

Some weeks back when textile sectors were flaying one another, non-textile products had shown extra-ordinary rise. Then well-wishers had taken a sigh of relief that other than textile sector will make up possible loss sustained by textile sector, which and rightly so is called the backbone of the economy. The report is happy augury for the economy, which is bound to strengthen. The authorities should take note of voices form country's four concerns and evolve ways to draw down before they touch sky high. The TDAP has not been given due recognition, perhaps. The achievement on the export front seems to be the credit of TDAP.

DRIVE AGAINST WHITEFLY TODAY, SHOULD CONTINUE

Only a couple of weeks back agri officials had informed growers that Whitefly attack was noted in plants in certain areas in Punjab. That was half work done, because growers know through past experience but are least aware of latest demand for tackling pest attacks. The officials are in touch with TV channels, relevant conferences and workshops and experience of world experts printed in media.

Thus the report that Punjab agri Minister said the other day that department has launched an elaborate campaign for effective control of Whitefly on cotton. The field workers have been duly asked to be ready with their experience and help the growers who are alert to follow instructions with gratitude. The worried farmers, nearly 90pc who work in fields-plough them, water them, sow seeds and pick up undesirable weeds depend on growth and harvest.

The practice has not been properly imparted consequently crops are left on the mercy of God. As a result if production suffers, it is growers who have to suffer. Time has come when all should scrupulously work in whatever capacity they can. Not only that all fields are not fully utilised, which God has given to their country in abundance. Only as much land is used that yield annual needs of the land owners. Is this not the waste? Should it continue!

SURVIVAL IN NATIONAL INTEREST:

Where the nation had led this country to be so vivid can be seen with naked eyes. The national feeling after deaths of founder of this God gifted land could hardly been seen, no one can be felt even. Thank God now the national word is whispered in relation of country and economy. Many gaugers now have started looking at the changing scenario.

The value-added sector has given a call to authorities to come to their rescue in national interest. The authorities must have taken the call seriously and despite they themselves in bad shape, must have planned so that question does not really arise. The nation is taking a difficult but positive turn and all genuinely seems to be hell bound to make this distorted country where dreamers had thought to take it to. The value-added sectors were never so restive, but today. They are ten times more contributing to kitty and need if not undue attention but necessary care to never again give call in the name of national survival alone.

Whether it is call for huge blocked funds somewhere or gas, power and cheap raw material, they need to be heard so that they try to survive and ensure survival of national interest.