Uncertainty prevailed on the cotton front, as fluctuation both ways were marked despite perception surge will continue.

Spot opened at Rs9200, while depicted Rs9400 on Thursday.

But ultimately slashed to Rs 9,000 in two steps.

WORLD SCENARIO:

India was in news as it renewed its decision to export more or less 5.5 million bales, slight change in mode of requiring by needy states such as Pakistan, the previous contract affected in November was nullified and new method was announced.

Earlier exporters had sought and given licences by cotton commission but under new scheme of things had to apply any other relevant authority, which was not made clear.

Pakistan took sigh of relief.

China too felt relaxed.

Meanwhile, world prices were on northward move, providing shock to players who were more than sure that correction was around.

However, this week under review saw opening future ending at 4.00 cents up at $1.5412.

Though trading volume was low as X'mas holidays were close.

Chinese orders were not forthcoming but cotton prices sent signal of prevailing high rates.

Towards the middle of the review week as market considered cotton was over bought by some profit takers and investors liquidated their stocks putting pressure on the price which was limit down.

But overall belief among the players stood firm in view of the Chinese cotton striding and expected tight supplies prices will persist firmer.

Indian latest announcement that it will allow exports of just 2.5 million bales will strengthen rate.

The Indian authorities taking support of need within country but background is surging prices basically.

On Monday the US cotton futures finished the daily limit up at a one-month top on light fund and speculative buying, with the market poised to hit a new record high due to tight supplies.

The key March cotton contract on ICE Futures US increased 4.00 cents to close at $1.5412 per lb, within sight of the all-time record of $1.5723 hit on November 10.

Since trading around $1.10 on November.

23, cotton futures have increased almost 40 percent, as tight supplies and strong mill demand reignited the rally.

The volume of business though was light.

Total volume traded was around 9,500 lots, over two-thirds below the 30-day average at 31,500 lots, Thomson Reuters preliminary data showed.

On Tuesday trading in the cotton options market was halted for a second straight day after cotton options rose by twice the daily limit, ICE Futures US said.

"Trading of the options contracts is halted based upon a determination by the exchange that the lead month futures contract is trading at a synthetic price that is equal to two times the daily price limit," the Exchange said in a statement.

The benchmark March cotton futures were trading up by the 5.00-cent daily limit at a record $1.5912 per lb.

The option cotton contract traded at $1.6412, up 10 cents.

On Wednesday the US cotton futures ended down the five-cent daily limit on profit-taking and investor liquidation one day-after the market hit a record top and analysts believe cotton may see follow-through pressure before the long Christmas break.

The market will be closed on Friday and reopen on Monday.

The key March cotton contract on ICE Futures US fell the five-cent limit to finish at $1.5412 per lb.

After finishing limit up the last two sessions, the market headed the other way on Wednesday.

Cotton's performance called to mind its performance on November 10, when it traded the daily limit up before finishing almost limit down.

The May cotton contract on the Zhengzhou Commodity Exchange last traded 1,135 yuan lower on the day at 27,640 yuan per tonne.

On Thursday the US cotton futures ended the daily limit down in technical selling, as players took cash off the table in the best performing commodity of 2010 in time for the Christmas holidays.

The market will be closed on Friday and reopen on Monday at 7:30 am EST (1230 GMT).

The key March cotton contract on ICE Futures US fell the 6.00 cents limit for the second straight day, to finish at $1.4812 per lb.

Volume was modest as it stood at about three quarters of the 30-day norm of 29,200 lots, Thomson Reuters preliminary data showed.

LOCAL TRADING

The cotton market turned firmer owing to cotton exporters entering the market to finalise new deals.

Meanwhile India - has allowed surplus cotton exports.

The previous deals with cotton commissioner won't stand rather some other authorities were asked to contact.

The report greatly consoled Pakistan importers though they will have to enter new deal possibly on higher prices.

Meanwhile, KCA spot rate was raised by Rs 100 to Rs9200, nearly 20,000 bales were lifted in price range of Rs9000 and Rs9500, higher than spot rate, phutti gained equal amount in Sindh and Punjab and was quoted Rs4000 and Rs4300.

On Tuesday spot prices and in ready maintained upsurge.

The spot stretched by Rs 100 to Rs9300, in ready some 17000 bales were lifted in price range of Rs9000 and Rs 10,000 phutti did not lag behind as it rose by Rs 100 to Rs 200 in Sindh and Punjab.

As is practice, when prices look up buying is contracted until prices turn favourable.

On Wednesday Indian announcement that it would provide new licences to exporters had little effect on local cotton markets but sellers did not heed at all.

Sellers possibly got the cue that allowing exports of half of 5.5 million bales was for exports at higher prices.

The spot rate was instead raised sharply by Rs 200 to Rs9500.

Buyers were shocked, as they had to pay still more bought 25000 bales of cotton at price ranging between Rs9300 and Rs 10,000.

On Wednesday prices gave in as leading buyers were on sidelines due to several factors major being sharp rises.

The spot rate was down by Rs 100 to Rs9400.

In Sindh and Punjab phutti also backed down by Rs 100 to Rs3900 and Rs4200.

World rates were also seen weak, though that was considered a short-lived affairs.

However, nearly 10,000 bales of cotton were lifted at Rs8,800 and Rs9700.

The long holidays and liquidity crunch are also factors leading to back of interest in buying.

News from India that it stopped yarn export fed people bear idea to speculate.

On Thursday the Karachi Cotton Association (KCA) spot rate was brought down by Rs 400 in a single day slide to Rs 9000 ahead of long weekend.

Seed cotton prices in Sindh and Punjab were unchanged at Rs 3,900-4,200.

In ready business came down as over 7,000 bales of cotton changed hand between Rs 9000-9500.

According to some analysts drastic fall in the spot rate and slow trading activity were seen on the local market owing to extended fall in NY cotton futures on lack of buying interest.

Business may keep slow pace following the holidays on account of the New Year, Christmas and birth anniversary of Quaid-e-Azam.

STATE-OF-THE-ART RESEARCH CENTRES:

The Food and Agriculture Minister Nazar Ali Gondal has possibly first time broke such pleasant news about states-of-the-art centres for research likely to go to give a boost to agriculture in this country whose economy is largely dependent on God's willing.

The research centres are expected to bloom with of course US assistance for cotton, wheat and livestock.

Such assistance was required long before, which would have made this country flourish and prosper.

Anyway, better late than never, if such research centres were set-up before long and without facing any setback.

Gondal in written reply informed the National Assembly that government had identified and implementing many steps for promotion of agriculture.

The programme is spread over three to five years duration and it is hoped it will not hit by any snags.

The special mention regarding warehousing facilities, agriculture marketing and grain storage facilities is very encouraging what however, he particularly mentioned attracted attention that government is serious about introducing Bt cotton, which has been debated and discussed in vain.

In fact Bt seed was tried but result was not encouraging.

Those who track the process were not whether sure right type of seeds were used.

The result naturally was very discouraging.

If government is serious this time textile policy will get boost where cotton output up to 1014 envisage around 15 million bales.

MOST GINNERIES ARE OPERATIONAL:

The cotton production has declined by 16.95 percent as arrivals recorded at the ginneries on December 15 from 11,291, 149 bales same period of corresponding year, while it was registered at 9,377, 263 bales.

The shortfall cannot be levelled unless imports have covered to feed the mills and let the exports of textile products going.

Out of nearly 1400 ginneries, 945 units in Sindh and Punjab have started operation.

The rising prices in the world have made jubilant the sellers, though have the same reason vexed the cotton consumers.

The rising prices are a setback leaving often cotton consumers on the sidelines, but bouncing back when sellers offered little relaxation.

The lint has in world markets soared to record level to $1.4097 cents.

But prices have discouraged textile exports but what has stood firm are opening opportunities in EU knocking at the door while change in outlook marked in friends could enhance opportunities further.

Up to-now of course opportunities remain sort of trial in US Congress and in review panel of the two.

India has shown deep anger quite naturally.

But co-operation scenario is on the spread.

Major states constituting the European Union have given their consent, Britain, Germany are boldly advocating for the go ahead to more than ever ready Pak value-added products.

Once this green signal from WTO is in the air, ROZs too are in advance stage of approval, just needing a nod of prevailing condition.

Anyway India has spent its market and it is likely at least agreed quantity of the lint will be reaching this side of borders.

Up to X'mas Pak textile exporters have earned satisfactorily and it is hoped will take advantage of any opportunity coming in the way GSP plus.

GOOD NEWS FOR TEXTILE AILING UNITS:

The textile exports have shown encouraging output, which seemingly has pleased government who according to textile minister plan is underway to give protection to the ailing units.

The textile products exporters were hard up on many fronts, still gave good account of itself.

Despite high cost of doing business managed to sell products compelling minister to accept growth was robust.

He accepted power and gas shortage had put negative impact on the country's textile growth.

He, however, recalled first textile policy, which he said ministry was committed to implementing the same to reach, God's willing, $25 billion despite several lacunas.

He mentioned particularly cottage and yarn shortage and soaring cost of production.

The minister mentioned about his ministry's bid to train illiterate rural people with textile professional techniques across the country.

In Karachi scores of courses have been started.

Scores of women are coming with a view to get training from Thatta, Mirpurkhas and other part of the province.

He regretted banks have unfortunately stopped lending loans to textile sector.

Thus the industry continues to face financial crunch.

He was apprehensive about imposition of RGST on zero-rated exporting sectors blocking their liquidity further.

He was critical of US lack of interest to construct ROZs otherwise he hoped country's economic condition would have improved.

The ROZ scheme is still in US congress waiting to dawn to come.

GAS SUSPENSION, OH!

Potential for gas and power is abundantly available.

The lack of interest on the part of successive governments, to keep both streaming and to export oriented sectors is taking tolls, according to chairman Bedsheet and Upholstery Manufacturers Association (APBUMA).

To question why this country is not on the path of progress and prosperity like China, India, Singapore and Malaysia to name a few is self-admonishing nearly half a dozen enthusiasts civilians and uniform came in power turn by turn to better the country and economy in lurch.

But took refuge behind accusation that all the wrongs had been gifted by rulers who ruled.

Thus took work on vital dams, canals and road, leading to markets received scanty attention.

Despite reserves of oil and gas of course coal were deferred on one or the other pretext years after independence excavation was said to be costlier than imports of stuffs.

The pretext was just to please neighbour who wanted fields on their side to remain intact.

The result today can be seen in the shape of power and gas outages and load shedding.

Besides, roaming with begging bowl lest some one spared some money for this poor country and of course taxing repeatedly to those who pay taxes without murmur.

Those who were trying to maintain exports despite odds, now are crying hoarse, they cannot honour exports orders already in hand.

The coal reserves are so huge to cater to our power needs for years.

But it has not been touched on grounds of environmental degradation.

The coal reserves elsewhere in the world be it China or South Africa or parts of India coal has been obtained for years.

Chairman has hinted at ceasing to supply gas to domestic consumer in villages.

How authorities take the hint is to be seen, or perhaps will be ignored.

Copyright Business Recorder, 2010

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