Trading dwindles from slow pace to dormant on domestic market due to high prices, tax measures

Trading in cotton is in low pace for prices in domestic market are not in line with the world trend.
WORLD SCENARIO: Despite gradual dip in the cotton futures price, preparation for maximum acreage availability is being scrambled. The US growers eyeing to plant cotton 2011 around 13.13 million acres, highest in five years. China is as usual quiet about growing size, so is India. Brazil thus far spoken to enlarge cotton crop size, where soya used to be main export, along with wheat, corn and cotton, Brazil is more determined about cotton, running around $2 a pound, but investment that will be required over purchase of machinery is a big road block.
Timing, too is being considered seriously winter is finest time as rains are not expected in most cotton growing areas, very lately India had to cancel finalised deals due to rains, which destroyed quality of standing crop, picking of cotton, when ripe also need to be taken care of as it must be carried out between 9am and 5pm to save crop from dews. Those countries where crop acreage could be enlarged are lately taking seriously developments in Libya, ME countries and earthquake and Tsunami devastation where cotton products will be in demand, but the size will depend on price which sail around dollar two a pound.
On Monday the US cotton futures finished easier after late investor profit-taking in subdued dealings back pedalling from a one-week high reached earlier in the session. The key May cotton contract on ICE Futures US shed 0.16 cent to close at $1.9896 per lb, moving between a low of $1.9735 an $2.0488, last seen on March 14. The last two sessions, the contract had risen by the seven-cent daily limit. Open interest, an indicator of investment exposure in cotton, stood at 173,119 lots, as of March 18, a level that is still near the lowest since late July 2010, data from ICE Futures US showed. Volume traded stood at 14,000 lots, over 55 percent below the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures closed up their daily trading limit, as modest investor buying was featured in otherwise subdued dealings, analysts said.
The key May cotton contract on ICE Futures US rose the seven-cent limit to end at $2.0596 per lb, with the session low at $1.9743. The contract has been limit-up in three of its last four sessions. Volume of around 14,400 lots was over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Open interest, an indicator of investment exposure, stood at 174,321 lots, as of March 21, still near its lowest point since late July 2010, data from ICE Futures US showed.
On Wednesday the US cotton futures settled lower on investor profit-taking, as the failure to extend the market's advance prompted players to liquidate positions in fibre contracts, analysts said. The key May cotton contract on ICE Futures US fell 4.09 cents to end at $2.0187 per lb, dealing between $2.0997 and $1.9896, which was down the 7-cent trading limit. The volume stood at around 24,000 lots, about a fifth below the 30-day norm, Thomson Reuters preliminary data showed. Open interest in the market, an indicator of investment exposure, stood at 176,065 lots, as of March 22, a level that is above an 8-month low, data from ICE Futures US showed.
On Thursday the US cotton futures settled higher on investor buying and as Texas, the top growing state in the country, suffers a drought said to be its worst in more than 40 years. The key May cotton contract on ICE Futures US climbed 6.95 cents to end at $2.0882 per lb, dealing from $1.9687 to the 7-cents limit up at $2.0887. Volume traded stood at around 25,800 lots, almost 15 percent below the 30-day norm, Thomson Reuters preliminary data showed. Open interest in the market, an indicator of investment exposure in cotton, was at 176,212 lots, as of March 23, a level that is close to an 8-month low, data from ICE Futures US showed.
On Friday the US cotton futures closed on investor profit-taking and players began looking toward release of a key government plantings report toward the end of next week. The key May cotton contract on ICE Futures US dropped 4.33 cents to end at $2.0449 per lb, dealing from $2.0263 to $2.1116. On the week, the market is up 2.7 percent. The market faltered when it tried to push its way beyond $2.10 and maybe $2.15, basis the key May contract, said Mike Stevens, an independent cotton analyst in Louisiana. Volume traded stood at about 16,000 lots, 40 percent below the 30-day norm, Thomson Reuters preliminary data showed.
LOCAL TRADING:
The week opened with cotton consumers staying away from market, as new tax measures were unacceptable to them. The new canon aimed aid value-added sector, which already was with back to the wall.
However, spot rate stayed put at Rs 12,500. Phutti low type was selling at Rs 4000, while superior type ruled at Rs 5000.
On Tuesday the sellers showed relaxed attitude by slashing spot rate by Rs 500 to Rs 12000. The most active cotton buyers have been at odds with the FBR to keep taxes low or even away so that trading in cotton turns out to be favourable. Perhaps cotton buyers too had their eyes on the depressing cotton rate there pressing sellers to slash prices further.
On Wednesday cotton market remained closed on account of Republic Day.
The market opened on Thursday trading in cotton was at low ebb, as news about imposition of new levies was very much alive and disturbing. Besides this Faisalabad was reporting closure of yarn market, which has been in practice for sometime past. A fresh bid to get unregistered firms documented is also restricting cotton trading very much. However, spot rate on this day was unchanged at Rs 12,000. Low type phutti prices in Sindh and Punjab was doing at Rs 4000, while superior phutti was selling at Rs 5000. In ready 2400 bales of cotton changed hands in price range of Rs 12000 and Rs 13000.
On Friday Despite the low volume of trade, official spot rate was higher ahead of a crucial meeting of stakeholders with the finance minister. Karachi Cotton Association (KCA) official spot rate was enhanced by Rs 200 to Rs 12,200. In Sindh and Punjab phutti price of low type was at Rs 4000 and superior type also unchanged at Rs 5000. In ready business, nearly 1500 bales of cotton finalised between Rs 11800-13000 (credit).
On Saturday listless business was seen on cotton market, as main buyers remained on the sideline, waiting for the outcome of the meeting of all stake-holders with the financial minister. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 12,200, they said.
In Sindh and Punjab phutti price of low type was at Rs 4000 and superior type also unchanged at Rs 5000, they said.
In ready business, not a single deal finalised due to buyers lack of interest.
TEXTILE TRAINING INSTITUTE FOR ENHANCING EXPORTS
The secretary commerce has given go-ahead signal to TDAP chief to initiate textile institute for the textile sector. The plan being initiated is late, but it is better late than never. As a matter of fact this would not be the only one, may be large enough to accommodate trainees thronging periphery of industrial area for a break. Some training institutes do exist, but they are far from meeting the vast needs.
To speak more realistically young men with firm knowledge and remuneration prefer to serve any foreign country. Our young men are intelligent and they take little time in learning the art that please their employers. The new textile learning institute that is being planned is expected to build raw hands so that they earn for themselves and their kith and kins, their health, education and life style.
The discussion in the meeting on a couple of decision made the participants optimistic to the core. Secretary commerce has advised TDAP to take initiative for an institute so that finely trained workers produce readily acceptable textile products in countries where rivals are making roadblocks.
Besides required number of training centres and institutes, there at least quarter of a dozen essentials the authorities simply fail to supply exporters regularly - such as power, gas and the money pay exporters against advance tax for months. It is time accusing government who hand over powers to incumbent rulers is replaced with positive action.
EU'S MOVE TO WAIVE PAK TARIFF FAILS AGAIN
If by now the EU's very eager will that the waiver allowed to Pakistan on some textile products because of the August devastating floods plus war against terror on behalf of the restive world, that would have been a great humanitarian deed. But months have passed, and two bids have utterly failed despite 100 percent backing of the EU. The offer took, this shape after years of repeated request by authorities who matter in this country.
May be some wrong is detected in the stories that India blank point rejected when offered FTA on silver plate. In order to show two way link and closer relation or a step further - friendship, needs a kicking economy. This is besides the question if the richer one knows your weakness will pay you least respect. Thank God, the extent of damage has been so far under control. The EU had put up case with the TWO, which is bereft of a real existence and possibly can do more harm than any good.
More than a month back when the case was first placed before WTO confirmation Pakistan was more than sure to get the desired nod but an old friendship proved too much. How the second bid was thrown into dust is not clear what is clear is that question has been loud, whether WTO will get deal signed by the end of this year. About Pak case the end of the tunnel presents even darker days.