Better than expected phutti arrivals, falling trend in New York futures keep prices on lower side; overseas demand likely to stabilise market

Toward middle of the week cotton prices were nearly being managed naturally to the worry of textile exporters. On the opening day of the week spot rate shed Rs 50 to Rs 5500, but by the closing day it was raised to Rs 5,800.
WORLD SCENARIO
Cotton futures derived much substance from Pak buying rush and China's building official stock spurring prices. Indian authorities bowed to cotton exporters by putting halt to exports. The logic behind was bad weather causing production loss though other areas Rajistan, Haryana and Gujrat beefing up the loss. Indian mills are in comfortable position, permission to export cotton won't worry textile exporters. In the US farmers disposed of harvested cotton, on the back of gradually surging prices.
Pakistan textile exporters have been considerably relaxed over pace of seedcotton arrival, which is pulling prices down. The volume gradually is bulging from just 1000 to 3000 bales to 30,000 bales of cotton during outgoing week. The cotton exporters have been in the market, which is a cause for worry for the textile product exporters.
On Monday the NY cotton futures settled higher on investors and option-related buying as talk circulated in the market that a top merchant is poised to take delivery of the spot contract when it goes into first notice next week. The spot December cotton contract on ICE Futures US increased 1.55 cents or by 1.5 percent to finish at $1.0079 per lb, moving from 97.79 to $1.009. The now-active March cotton futures fell 1.42 cents to settle at 96.62 cents a lb. Total volume traded on Monday hit around 31,000 lots, more than two thirds above the 30-day norm, preliminary Thomson Reuters data showed.
On Tuesday cotton futures closed higher on technically inspired investor buying and the momentum from the advance could lift fiber contracts in the days ahead. The spot December cotton contract on ICE Futures US increased 1.87 cents or by 1.8 percent to finish at $1.0266 per lb, moving from $1.0011 to $1.0469. The now most active March cotton futures went up the four cents daily limit, or over four percent, to settle at $1.0062 a lb, with the day's low at 96.57 cents. Total volume traded on Tuesday hit over 32,100 lots, more than two-thirds above the 30-day norm, preliminary Thomson Reuters data showed.
On Wednesday the NY cotton futures settled mixed in a quietly traded session as players awaited release of a government sales report to see if top consumer China again bought large amounts of cotton. The spot December cotton contract on ICE Futures US increased 0.84 cent to finish at $1.035 per lb, moving from $1.0207 to $1.0436. It was an inside day since the range was within Tuesday's $1.0011 to $1.0469 band. The now most-active March cotton futures fell 0.14 cent to settle at $1.0048 a lb, ranging from 98.45 cents to $1.0088. Total volume traded on Wednesday hit almost 19,500 lots, less than three percent below the 30-day norm, preliminary Thomson Reuters data showed.
On Thursday the NY cotton futures settled down the daily limit on investor liquidation as weak demand and fear over a global recession, which hit other financial markets depressed fiber contracts. The spot December cotton contract on ICE Futures US dropped four cents to finish at 99.50 cents per lb, with the day's top at $1.0396. The now most-active March cotton futures fell four cents to end at 96.48 cents, with the session high at $1.0085. Total volume traded on Thursday hit over 21,000 lots, little different from the 30-day norm, preliminary Thomson Reuters data showed.
On Friday the NY cotton futures fell by their daily limit, as investors fretted over Europe's debt crisis and players exited long positions in the December contract before first notice day next week. "A lot of it's Europe, which had a lot of pressure on a lot of commodities today, cotton more so," said Sharon Johnson, senior cotton analyst at Penson Futures. The spot December cotton contract on ICE Futures US slid by its daily limit for the second day in a row, declining 4.69 cents, or 4.71 percent, to end at 94.90 cents per lb. Its range spanned 94.77 cents - the lowest since August 9 - to $1.0015. Now-most-active March cotton futures dropped 3.21 cents to close at 93.14 cents, a 3.33 percent decline, after trading between 93.12 and 97.74 cents per lb. Total volume traded on Friday rose to 25,263 lots, about 18 percent greater than the 30-day norm, according to preliminary Thomson Reuters data.
LOCAL TRADING
The panic selling was nearly stopped for obvious reason to restrain prices from moving down. The market sources saw no reason in down-drift in prices, as phutti arrival pace was nearly same as before. The spot rate rose by Rs 50 to Rs 5500, phutti in Sindh rose by Rs 100 to Rs 2000 and Rs 2600, in Punjab too, gained same amount to Rs 2400 and Rs 2800. In ready 20,000 bales changed hands at Rs 3900 and Rs 5700. Market sources expected cotton exporters to indulge in exports, thus, giving ginners ground to raise prices.
On Tuesday marking brisk activity ginners seized the opportunity to raise prices further. Anyway spot rate was put at Rs 5500, phutti in Sindh and Punjab held to previous levels. Panicky buyers lifted 30,000 bales at Rs 4275 and Rs 6000. As expected exporters lifted quality lots for exports.
On Wednesday hectic forward buying on quality factor seen on cotton market. Buyers apprehend quality cotton won't put on offers. The volume seemed bulgy also because exporters seized the opportunity to grab as much as possible. Spot was unchanged, seed cotton gained in Sindh Rs 200 to Rs 2200, while better type rose by Rs 100 to Rs 2700. In Punjab phutti low type was unchanged, while better type rose by Rs 100 to Rs 2900.
On Thursday spot rate was raised by Rs 200 to Rs 5700, seed cotton in Sindh stayed put and in Punjab also prices stayed unchanged. In ready 40,000 bales of cotton changed hands at Rs 4400 and Rs 6100. The buying has been another record said to be on apprehension that sellers may not be liberal to sell per demand.
On Friday surge in demand by the cotton importing countries may help prices to resist decline in the coming days. KCA official spot rate was increased by Rs 100 to Rs 5,800. Prices of seedcotton in Sindh were unchanged at Rs 2200-2700 and in Punjab rates held the overnight level at Rs 2400-2900. In ready dealings above 20,000 bales of cotton changed hands at Rs 4,800-5900.
On Saturday better-than-expected phutti arrivals and declining trend in the NY cotton futures pushed prices down on the cotton market on Saturday. KCA official spot rate was unmoved at Rs 5,800. Prices of seedcotton in Sindh dropped by Rs 100 to Rs 2100-2600 and in Punjab rates also lost the same amount to Rs 2300-2800. In ready dealings above 36,000 bales of cotton changed hands at Rs 4,200-6000.
GOVT TEXTILE POLICIES FAILED TO YIELD POSITIVE RESULTS
Drawback of local taxes was announced in the textile policy 2009-14 and many decisions taken in the textile policy 2009 have produced good results and exports of value-added textile goods have increased during last two years. This was apparently considered view of the Chairman Salamat Ali, who suddenly seems to see industrial production is decreasing and investment in textile sector flowing away.
Some leading contributors in textile value-added sector have been offered opportunities attractive and gainful enough in neighbouring countries. Otherwise, the fact remains that multiple difficulties and ongoing energy crisis would plunge the country export oriented and labour intensive textile sector to disaster and closure of industrial units bring joblessness causing industrial unrest and worsening law and order situation.
Are relevant authorities listening to the desperate call in the interest of both the exporters and government needing money for improving good governance. The election commission, politicians and incumbent rulers do not seem to be in hurry but surely eyeing elections today or a year or two afterwards.
PAKISTAN DID NOT EXPECT BD OPPOSITION
No, it was not all that APTMA retorted to BD for its opposition in WTO where EU access package was lying for now over a year, meant to provide two successive flood hit Pakistan. The duty free exports of 75 items, out of which 65 are textile items to EU, was, as said earlier to support country's economy affected with devastating floods.
Daily newspapers carried more than one report, outburst against opposition in WTO by the BD, itself gaining from EU offered facilities, besides enjoying status of Least Developed Countries, which has enabled BD to claim exports to EU countries about Euro 10 billion of textile products. After APTMA hosts of business community considered essential to voice against what had already been thrashed out.
Dr Mirza Ikhtiar Baig, Federal Advisor on Textile came out with regrets on same subject. Speaking factually he said initially three countries India, BD and Sri Lanka, two of the mentioned countries enjoy LDC status, had promised to withdraw their objection, but except India others have continued to oppose. In the process an angry Pakistani: saw India poking BD to continue to oppose while itself dropping the opposition.
If so where is element of surprise. When the countries took stand in WTO, they must have strong and stable. This is what have always been sources close to textile asking that build your foundation strong and see the outcome. Did anybody heed to the call?
WITHDRAW TAXES: APSIA
The Apsia leaders have claimed taxes have been re-imposed to pester the minds of suppliers of nearly complete material for re-touching and exports of textile products. They have reminded similar taxes were protested and duly withdrawn, which saved bulk of textile products to be imported. Addressing conference every leader belonging to sizing, warping, processing, spinning a power-loom units strongly protesting said unless gravity of the situation is redressed they would be forced to cease working.
They said they had to resort to similar undesirable action as they had to take on March 19.
Authorities are helpless, so are the supplier of textile products for ultimate exports, which beefs up the national kitty. But in their front was horrible new tax of 21 percent on sizing and related industry. Already pestered by irregular supply of gas and electricity and high cost of inputs, paying new taxes was an impossibility and only course left would be to submit to FBR action rendering jobless joining thousands of workers already roaming around the industrial units.
Increased exports are need of the hour. Efforts should be made to avail the existing opportunities to push exports so that begging bowl is broken once for all.
PRESIDENT APPROACHED FOR GINNERS BAILOUT PACKAGE
The PCGA knocked every possible door, not finding any resounding response from any quarter, found refuge in Presidents cover. In fact ginners were banking on induction of TCP to buy the cotton thus ensuring cover for growers and ginners. The silence of growers is strange, who are, according to the sources close to them, that during bumper production, growers are coarsely asked to dump the produce around ginneries. As a matter of fact it is all because of the middlemen who take away the share of ginners.
Sources close to trade understand that growers fall upon middlemen, because they are paid agreed amount. The deal growers prefer because they don't have to wait long for payment. The cotton growers are generally poor and cannot see their cotton remaining dumped for meeting the day to day needs. The authorities would do well, particularly when textile ministry exists and can intervene in case of any disputes.
The ministry can least do is that it can enable cotton committee to not only work hard on collecting crop but be honest. Thus growers, ginners and the cotton consumers with varying interest will make no noise, as is seen very season.