Trade on cotton market remains restricted due to high prices, fresh tax measures

Trading in cotton remained restricted, as sellers won't follow the world trend, which is on the down side. The spot rate however, was pulled down substantially underpinning courage to lift cotton for immediate needs. The spot was at Rs 12500 on closing on March 19,2011.
WORLD SCENARIO:
Cotton futures surge that excelled all previous record to peak at over $2.00 per pound gave way to downward drift past week. The trim was very gentle, primarily because correction follows, beside unexpected heart-rending quake followed by Tsunami claimed to have taken a toll of presumed 10,000 or more. Third largest flourishing economy is struggling to avert meltdown and nuclear plant explosion. Such magnitude of devastation can cause loss of cotton demand is understandable.
However, weekly export sales reported by USDA indicated cotton growers would utilise available acreage taking indeed risk growers of other crops won't lag behind keeping in view equally handsome returns. India held back over one million cotton bales on lousy pretext. Has it done similar breach of agreement with China is a question this ugly episode will remain in history.
How strange reported EU's request to India for supporting Pak specific trade package at the WTO was rebuffed. "India has refused to support EU's request for waiver on grant of additional autonomous trade preferences to Pakistan in the WTO council for trade of goods. Pakistan is hard pressed from outside and within trying to make sails smooth. Australia and S African cotton report was not seen. Earlier report had said conditions there were quite palatable. Disturbed condition in the north of Africa and ME has been having telling effect on cotton.
On Monday the US cotton futures settled the daily limit down, falling for the fourth time in the past five sessions, as uncertainty related to Japan's nuclear crisis triggered a commodity sell-off. The key May cotton contract on ICE Futures US lost seven cents to finish at $1.9794 per lb, trading from $1.9794 to $2.0683. Last week, the market lost 3.7 percent, the first weekly loss for cotton futures in nine weeks. The Reuters-Jefferies CRB commodity index fell 0.4 percent.
On Tuesday the US cotton futures finished limit down for the second straight session as fears over Japan's disasters and nuclear crisis on the global economy took their toll on fibre. The key May cotton contract on ICE Futures US dropped its seven-cent limit to finish at $1.9094 per lb, with the session top at $1.9957. Last week, the market lost 3.7 percent, the first weekly loss for cotton futures in nine weeks. Volume traded stood at 18,000 lots, over 50 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Wednesday the US cotton futures finished near a three-week low, dropping for the 6th time in seven sessions as investors exited positions after news Japan's nuclear emergency was getting worse. Europe's energy chief warned the situation at the earthquake-damaged plant was "out of control" and urged people to leave the country. The key May cotton contract on ICE Futures US dropped 5.82 cents to close at $1.8512 per lb, trading from $1.8501 to $1.9794. It was the lowest close since February 25. Since hitting a record top at $2.27 last month, cotton has lost nearly a fifth of its value, Thomson Reuters data showed. Open interest in the market, an indicator of investment exposure in cotton, stood at 174,801 lots, as of March 15, compared with 172,588 lots in the previous session, which was the lowest since July 29, 2010, data from ICE Futures US showed. Volume traded stood at 27,500 lots, about 15 percent below the 30-day norm, Thomson Reuters preliminary data showed.
On Thursday the US cotton futures finished up by their daily limit, as commercial and trade buying lifted the market off the previous session's three-week low. With the weekend coming up, dealers said players would be keeping a wary eye on Japan's nuclear crisis. The key May cotton contract on ICE Futures US rose by the seven-cent limit to close at $1.9212 per lb, with the session low at $1.85. Open interest, an indicator of investment exposure, totalled 173,403 lots as of March 16, still near the lowest since late July 2010, data from ICE Futures US showed. Volume traded stood at 17,600 lots, over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
On Friday the US cotton rose the seven-cent limit for the second day in a row on protective short covering amid worries about the situation in Libya and the potential for further mishap in Japan this weekend. With a 3.6 percent gain, the active May cotton contract on ICE Futures closed at $1.9912 per lb, extending the gain from Wednesday, when the market settled at a three-week low of $1.8512. Still, for the week, the market is down 2.84 percent. Open interest, an indicator of investment exposure in cotton, stood at 172,925 lots, as of March 17, a level that is still near the lowest since late July 2010, data from ICE Futures US showed. Volume traded was estimated at 17,000 lots, the lowest level since February 28 and almost 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
LOCAL TRADING:
The week opening day witnessed a solo deal in cotton price at Rs 13,000, as market moved rather slowly. The buyers are expecting prices to come down to reasonable level. The spot rate was put at Rs 12,700, phutti prices in Sindh and Punjab but superior type shed sharply by Rs 500 to Rs 5500. In ready off take 400 bales of Bahawalnagar changed hands at Rs 13000. Market players expressed surprise, as to why prices are not budging despite fluctuation abroad.
On Tuesday once again only deal at same level was marked, while spot rate was unchanged. In Sindh phutti prices ruled at Rs 4500, while in Punjab ruled at Rs 5500. Ginners were happy at low turnover as buyers were keeping away for obvious reason. Meanwhile, textile product exporters are finding themselves in hot soup, for delay in release of duty drawback.
On Wednesday trading activity gained pace on the market said to be due to prices coming down. Consumers however, were allergic about flood surcharge by 15pc. The spot rate was slashed down by Rs 200 to Rs 12,500. Phutti in Sindh and Punjab low type was traded at Rs 4500, while superior type shed Rs 300 to Rs 5200. Around 2600 bales of cotton were lifted in price range of Rs 11000 and Rs 12800. World rate of cotton has been in downward drift for uncertainties in Japan as well as in the ME.
On Thursday uncertainties ruled on cotton market as buyers were restrained from buying the way they desired. They hold the view and so the market operators that sellers were adopting. The developments in north Africa, Middle East and third largest economy Japan are inappropriately being used, which will weaken already shrieking economy. The authorities in textile ministry should act before value-added sector is rendered inert.
On Friday Mills and spinners kept to the sideline on the cotton market due to confusions over the announcements regarding tax measures for the textile sector. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 12,500. In Sindh and Punjab phutti price of low type was lower by Rs 500 to Rs 4000 and superior type also shed Rs 200 to Rs 5000. In ready business approximately 3000 bales of cotton changed hands between Rs 12000-13600.
On Saturday Subdued business was seen on the cotton market, as leading buyers were conspicuous by their absence. KCA official spot rate was unchanged at Rs 12,500. In Sindh and Punjab, Phutti price of low type was at Rs 4000 and superior type also unchanged at Rs 5000. In ready business, approximately 2000 bales of cotton changed hands between Rs 11800-12600.
PAK EXPORTERS FOUGHT BACK EFFECTIVELY:
So it seems beyond doubt, that Pakistan exporters of fabrics, garments have finally convinced Turkish authorities to spare them from imposing duty against supposed excess exports of textile made ups. However, a wait for some weeks seems to be necessary to pluck the fruit. Sometime in April, the Turkish authorities are planning to declare duty and how much. Pakistan is not the only exporter to Turkey facing similar threat such as China, India, Bangladesh, the US and Sri Lanka. The Turkish authorities are liberal enough, but they cannot allow Turkish manufactures to shut their industry and thus workers going out of job. The authorities have in full view the fabrics and stuffs not made locally imported ones serve the purpose.
Pakistan is passing through very bad days and brother country Turkey certainly knows Pakistan needs help from all quarters to survive. Turkish authorities are harassed naturally by global recession, which not even world class experts and economists pause a bit to say all has turned well with the world economic health.
Pakistani exporters have put forth their case nicely, hired Turkish lawyers and accountants, who, with close touch of the minds of authorities and manufacturers/exporters, will balance interest of all concerned.
PAK-CHINA FTA SECOND PHASE BEING LAUNCHED:
Before sordid account is about to end of first phase of Pak-China free trade agreement (FTA) in detailed, Pak manufacturers and exporters of textile running about is narrated marked for the last three four years to the US and EU. The all cadre approach to authorities yielded gross loss rather than FTA, which went to India from both the countries without least effort.
Back to story of two exemplary friends who have completed FTA and tightening up belts to begin a new second FTA.
China reminding Pakistan the first FTA stood in clear advantage of China. The fact could be quietly set aside but China in a graphic detail showed Pakistan was lost by $1 billion during the six years. The two-way trade totalled $4 billion, Pakistanis share in it being just dollar one billion. While China exposing its chaste feeling for their country said friends you should mix up with people for whom you manufacturer or build for exports you should acquaint with their likes and dislikes so that buyers while appreciating express eagerness for more rather than just one or two. Keeping this in view China has suggested Pak exporters to discuss and debate modalities before the end of the 2011. That country has gone out of the way to suggest all manufacturers and exporters strain their feeling how to end the big gap that Pakistan has suffered during the first FTA.
EVERY THIRD MAN IN SIALKOT IS AN EXPORTER:
Some months back newspapers hit headline other goods than value-added textile items scored maximum exports, which was a unique performance, manufacturing and exports in Pakistan are cumbersome job always faced with shortfall of one or the other essentials that take away export edge. This year condition was as bad, giving Sialkot non-textile exports highest score. That fact called for need to utilise Sialkots' business potential.
Sometime back the plight of the textile exports was so hopeless someone suggested to give a chance to knowledge based sector to be replaced Dr Ata-ur-Rehman was those days hell bent promoting information technology (IT) but for not his sake the IT has not matched the progress India has made. So call for need to utilise Sialkot's business potential has great meaning.
Sialkot is an entirely export oriented city of possessing century old industrial heritage and a bit of care and attention can help Sialkot contributing more than 12 billion dollars annually to the nation exchequer. The industrial sector of export oriented city, however, is facing shortage of trained and skilled workforce for many years.
Speaking about soccer alone 85 percent of total soccer production comes from Sialkot besides surgical instruments, leather goods, gloves and badges. What is expected of the government is least to develop and secure SME's culture. The people of Sialkot have developed roads and drains and the mega project of Sialkot International Airport has become operational already.
DUTY DRAWBACK CLAIMS SHOULD PROMPTLY BE PAID:
Exporters of textile products have always been found engaged in voicing for one or the other problem-if there is nothing like gas, power-duty-drawback claims are. The sector today being discussed is claimed by one and all - is singly the maximum foreign exchange earner - in other words helping topsy-turvy moving economy. The various textile sectors together offer jobs to bulk of jobless moving round the periphery of industrial litters. If such rich areas are ignored for any minor gains, harping day and might about the poll manifesto sounding maximum for poor turns out to be mere hoax.
The victims claim to have been under heavy pressure of financial crunch, what however is funny, according to them, they are being totally overlooked by relevant government departments like SBP and Ministry of Textiles. They further informed that ministry of finance had disbursed over Rs 1.5 billion a month back to pay duty drawback claims of exporters but the money allegedly remains dumped in SBP. The sector leaders beyond this bring forth textile ministry in question, which is acting as docile after departure of the first textile minister.
Textile exporters are passing through problems caused additionally by hefty hike in cotton prices. However, textile sector leaders prayed that SBP should immediately sort out problems and start paying dues so that fresh export bid move smoothly.