Almost crash like situations in world cotton rates and waning quality at home have shaken the determination of the ginners to dictate market trend.
Greatly affected also was trading due to volatility that has persisted during the week ended on June 5, 2004.
The spot rate stayed put at Rs 3100 without 15 percent ST and Rs 50 upcountry expenses. However, spot lost Rs 25 on Saturday to Rs 3075.
WORLD SCENARIO: The cotton futures registered sharp losses in New York trading during 4-day session generally in took out for a direction.
The analysts are tracing the developments and hoping futures could come down to the level China had started sweeping cotton buying some months back.
The first trading day in New York was Memorial Day holiday. On Tuesday futures settled to a 7-week low on option related and speculative sales.
Analysts send July may see follow-through pressure on the second day's trading but contracts like new crop December apparently saw better support in the ring and could rebound.
The also said a ban on foreign investors could limit liquidity in the contracts, but they would allow Chinese textile mills to lower by possibly bringing costs in line with global market levels.
On Wednesday cotton closed at another 7-week low on speculative and options related sales as market looked far further weakness ahead of options expiration in coming days.
Brokers said that if the July cotton contract falls to hold at its current lows, if might fall all the way down to the next target of 52 cents.
Fundamentally the market took note of the week USDA crop progress report showing 86 percent of the cotton crop planted.
On Thursday cotton futures closed at 9-month low on options-linked and speculative selling, though trade buying prompted a late comeback.
Traders said that option related selling by a major merchant and speculative pressure initially deflated fibre contracts, but trade accounts propped it up from the lows and enabled cotton to trim losses.
The last session on Friday closed with gains on option related and speculative buying as fibre rebounded after falling to a nine months low.
LOCAL TRADING: The cotton market, as other markets did, remained nervous all the week. The murder and deaths were hallmark the kept the trading hostage. Around or a little above 3000 bales of cotton changed hands.
But the difference was that cotton outlet and asking both slipped out of ginners hand. The spinners who have booked already 350,000 bales of cotton in advance for the 2004-2005 cotton season and at unfixed rate.
Growers are discouraged at the attitude. The farmers are being sought to produce 12 million bales of cotton but they are hardly satisfied with the return. Spot rate remained pegged at Rs 3100.
On Monday trading was known to only very close people, though day was highly disturbed due to martyr of a religions leader.
The second day was no better. Cheers have gone away from the market as spinners abhor the ruling high prices.
The cotton futures are faced with regular erosion from several weeks. The China buying which took the prices to 80 cents plus have been quiet for the time being.
However, two deals struck of Monday were reported in DMR. On Thursday, the look was depressed in the absence of spinners inquiries. The deals, if any, were not reported spot was unchanged.
The Friday was complete strike and leading brokers reported they had stayed back in homes. They said all city markets could not open and carry on businesses. However, market operators were quite worried about hedge trading permission given to some other organisation rather than Karachi Cotton Association (KCA).
They were musing the old hand KCA was being ignored which new workers were being trained to serve the private organisation to run the hedge trading.
Saturday's session saw good hit of trading with around 2000 bales changing hands. Incidentally first deal of 2004-05 season was struck for delivery in August. The official rate was down Rs 25 to Rs 3025.
JOINT VENTURES OFFER: Whenever Pakistan is offered joint ventures or invited to share by any country, it necessity admits superiority this country gained due to long experience in the field.
In the present cash Kazakhstan appears eager to start joint ventures in cotton sector. That country is greatly confident that it will learn from Pakistan.
At one stage Pakistan needs to import cotton besides what is available here. It joint venture takes a shape with Kazakhstan, Pakistan can buy its cotton needs with much ease and at competitive price.
Communication links are being improved. The offer is good one and if top manufacturers give heed to the offer both countries could gain.
The Ministry of Finance has received and disseminated the information among textile people who matter.
The place is Oblast in South Kazakhstan. The ministry has stressed a visit to the place by millers and manufactures has been planned for June 2004.
The months is already here, concerned industrialists and exporters should be proactive. The fields for joint ventures offered are in cotton growing, cotton refining, ready made garments and fabrics. It is hoped top textile industrialists and manufacturers have by now made-up their mind and tightened belt.
The circles who are in the field of cotton and textiles see no reason why the opportunity offered by Kazakhstan should find offer feasible.
However, those who will involve in joint ventures could very well be in a position to accept, for, as Kazakhstan has hoped will be gainful for the two countries. The fate of Chinese and Sudanese offers is also in limbo.
PSF PRICES UP: In recent days, the polyester staple fibre prices have been raised by Rs 3 claimed to have been caused by record surge in oil prices due to Iraq uncertainty and terrorists attacks in Saudi Arabia oil region.
The rising PSF cots attract attention particularly when cotton prices also surge. The Chinese interest which according to USDA bought 4.816 million RBs of US upland cotton. Big markets still await for chance orders from China. But in the meantime the world rate has come to the low level it had started surging, 57 cent pound from 80 plus cents.
The Opec has also in its meeting announced that it is going to raise output by two million bales with immediate effect resultantly ? price settled down 68 cents to $39.28. The idea behind recounting above is to remind that be it PSF price or cotton appear destined to favourable for the consumers.
The manufacturers of PSF claimed their products despite rise in the first stage Re 1 and very lately Rs 2, were still available at cheaper price than imported stuffs. It is a matter of time that prices will not be back-breaking but what has they already arranged, cannot be undone.
The exporters of cotton products will have to make their exportables cost effective. How they have to be realistic and practical. Even during the current season price dip was there but then in their wisdom instead of buying they bought time to see prices further dip.
Thus they were caught in whirlwind of price like. Today they are loser in other way also, that is quality lots are waning. Why?
TEXTILE: PAK IMAGE: Foreign experts has always poked Pak producers of textiles to switch over to value addition.
Their argument was that since Pakistan is itself a cotton producer, and in fact good enough cotton producers going for yarn of low counts and grey cloth or such cheap products is incomprehensible.
They thought Pak earning from exports of value-added products could up by eight times.
Once again such a - malay - has been punted out. This time from Pak embassy in Tehran which spot lighted that Pakistan's name has not been associated with good quality products. A line further is shocking which draws attention for concerted efforts to build image of Pakistan.
The message is not clear but leaves much to be desired from manufacturers and exports of cheap products not attractive to eyes.
However there is also another message asking textile exporters to take advantage of "considerable reduction in import tariff for certain textile products.
The items for which samples have been sought include, lining stuff, polyester yarn, cotton yarn, viscose fibre, gray-cloth, cotton of different grades, cotton polyester, polyester/viscose and polyester/cotton.
TAIL PIECE: Exporters should celebrate the announcement, that they would get rebate and duty drawback within a few minutes. If so happens the exporters in their own word would not be facing crunch.
Similarly, custom export facility to the exporters of bed-linen allowing 10 percent variation in minimum export price on the basis of quality and destination characterised by high tariff countries offers great relief.
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