The TCP is being gradually almost ignored as buyers have already lifted quality lots from it and fresh arrivals are gaining pace during the week ended on August 20, 2005. The ginners, who had not been able to sell, are being approached by the spinners and textile millers.
Spot rate was showing sign of dwindling and at the end of the week it was however, unchanged at Rs 2225.
WORLD SCENARIO:
The cotton futures was hostage as most of the players eagerly awaited supply/demand report owing to which it showed two-way fluctuations. October opened at 46.15 and December opened at 47.93 cents a pound. However, on Monday futures settled at an eight and half months low on continued speculative and fund sales as rains in W.
Texas set a bearish market tone. Futures dipped after USDA monthly supply/demand report was deemed a non-factor and traders shrugged the data off since the market figures were already priced into futures. The USDA upped its estimate of world cotton production to 109.79 million bales from 108.60 million last month. It placed US production at 21.29 million from 19.8 million bales.
On Tuesday futures were modestly higher in most technical business. Rains have placed more pressure on prices as ample supply issue started to weigh on traders' mind. Forecaster Meteorologist called for isolated showers in Texas with mostly dry on Thursday through Saturday. On the Thursday futures settled higher on some speculative rebound from last week's sell-off.
On Thursday futures was hit by speculative and local selling as the marked shrugged off much awaited export sales proved to be better than expected. The USDA said cotton sales at 459,500 running bales (RBs, 500 Lb) much better than the trade expected. Cotton shipment of previously booked orders amounted to 443,700 RBs compared to trade belief it would range from 100,000 to 150,000 RBs. Cotton analysts said they believed futures prices could grind lower as a huge cotton crop continues to hang over the market.
On Friday session closed with gain as trade and speculative buying boosted values although option-related sales kept prices from breaching their session highs. Meanwhile, USDA weekly sales report showed sales at 459,500 RBs and shipments at 443,700 RBs. October closed at 46.87 and December at 48.56 cents a pound.
LOCAL TRADING:
Local prices in the world markets dragged cotton trading during the week. The TCP has lost charm as spinners and millers perception is that the new crop qualitatively better than available with the Corpn. Slight chances of stocks with the ginners have improved and could be sold at reasonable prices. However, a few bales changed hands on Monday. Asking prices have moved down and attracting spinners and textile millers. The spot rate was down Rs 25 to Rs 2225.
The rains and floods had cast gloom somewhat over the new crop prospects. But the cloud of gloom as meted away and general belief is that crop is good and supply has become smooth. The TCP has been trying to do away with the pending stocks but whatever is left is considered inferior than the new crop available. On Tuesday spinners were around the market and the reservation had been completely seen nowhere. But the LG polls just a couple of days away and the inventory filled with TCP stocks plus some gotten from the ginners have offered patience to the buyers.
But they have been lifting slowly and steadily as the worst days for cotton in some days cannot be ruled out. The official spot rate was holding and cotton buying was seen slightly above the spot rate. Three deals were marked around Rs 2254 and Rs 2275. On Wednesday local government polls took over complete before the campaigning had stopped. Some enthusiastic buyers were in market anxiously looking for any quality lot and lifted.
The buyers had meanwhile, become conscious that speedily arriving new cotton crop could destabilise prices and pull it down. The consumers have stocked enough cotton from imported cotton, bought cotton from TCP and now have been optimistic of large productions. Half a dozen deals were finalised in the range of Rs 2225 and Rs 2250. On Thursday, as expected market had to be lacklustre due to local bodies polls besides the week had been showing sluggish going.
However, a press release received at our end revealed that TCP has been asked to stop exporting cotton henceforth. The TCP has been pretty quiet these days, despite it still has 400,000 bales pending.
It was advised by the authorities that TCP should do away with stocks by August 15, last. The market movement will be seen when it reopens on Friday. On Friday spinners were comfortable as they are after piling up cotton from imports and acquiring from the TCP, besides they are also enjoying the possibility of supply rush of new crop. They have meanwhile got a shock that TCP 400,000 bales could not be availed. What would be TCP policy must be painstaking that will TCP services be available at all? Spot rate was unchanged at Rs 2225. A few deals were lifted in the price range of Rs 2225 and Rs 2300 depending on quality Saturday's.
GSP PLUS STATUS:
Exporters probably know why initially they failed GSP plus status when it was being disbarred among deserving people - the LDCs (Lowest Developed Countries) basically. If they are talking about evolving consensus among themselves on changes being considered by the EU in 'Rules of Origin' for new scheme of GSP plus.
A recent report speaks GSP plus may be granted to Pak by early 2006. Was that to feed the harassed and embarrassed ones. The question is what had barred this country - the status that Pak had not enjoyed being called among Lowest Developed Countries (LDCs). Certainly Pak exporters cannot be given that status of GSP plus now. If terrorist had something to qualify for the SSPS probably it had been considered may times before.
This may be perhaps the punishment for keeping only on margin of LDCs and not LDCs, by keeping low count yarn and grey cloth as strictly vital exports. If BD has been granted or India has been granted gain related to these only partially shows favour no doubt but basically BD was given because it had to import most raw materials.
Primarily what hits to mind from the rule and rules being evolved is that LDC of a country is in view, a status quite sometime back. Pak was left out because it was not considered the poorest nor it is the richest on the basis of resources - raw material - etc. Some textile associations have awakened to evolve consensus considering they are being given due justice.
Commerce Ministry is being moved to hold mutual consultation and evolve a consensus to make it a point for lobbying. The naïve people, here the sources who commented on the issue said that the GSP plus held by EU dear was a mistake that caused Pak be left out. Do they mean by this that GSP status enjoyed by them was EU mistake? The arguments seems to have some substance. The GSP status was also a positive outcome of a fight.
The EU is a good trading partner shares the problem such as when China frustrated EU markets it did not cap the imports as America did. Instead it preferred to talk and finally found a way out. Our top leaders had one after another visited EU and tried to get PLUS status but EU said sorry. Then chances were strong because Pak exports had already facing set back due to 12 pc anti dumping duty. What special rule is being evolved in "ROO" is not known and it is also not known what has made exporters so optimistic? O, God help us!
TEX CITY PLOTS:
Satisfaction could only be derived from the fact that issues relating to textiles manufacture and exports seems to have been moving in traditional slow pace. A textile city in Tripura with 1000 existing knitwear production units was perceived with an eye on WTO regime. More units are being given due heed and soon production will go up after calculating how much or how many still needs to be done.
Immediately after the advent of WTO or quota phase out on January 1, 2005 and onwards, according to Indian cotton textile export promotion council chairman BK Patodia, manufacturers and exporters flooded the prospective world markets. In Pakistan spinners and textile manufactures knowledgeable circles informed that considered any move to improve exports and foreign exchange earning against the few haphazardly planned units.
The result was that authorities took undue breather and they are still doing the spadework. When the manufacturers will get the textile city plots might take six months. Initially 700 acres of land has been spared by the Port Qasim Authority. Equally important work was assigned to National Engineering Services Pak Ltd (Nespak).
It will do the master planning and structural designing and develop infrastructure facilities. How long these exercises will take will probably come anytime in the vague future. Those govt deptts involved in development are well-known in moving as slow as possible whether due to administrative or monetary constraints, sources said.
How will you take to go through the extracts of the report on which the story based, says: the project was going on for the last two years with public and private sector co-operation which, thank God yielded in survey work having completed while land cleared has been handed over to PTCL, long hand which is not Pakistan Telecommunication Ltd rather Pakistan Textile City Ltd.
The textile city would be established on an area of 1200 acres and stakeholders would hopefully start construction work on building structure "Within one year" However, the PTCL CE spoke highly of the potential of the project while rejecting lint that project had suffered delay. Meanwhile China and India go ahead with capturing the textile consumers world over with everything in place including their own text machinery plants and dye and chemical producing units.
HEDGE TRADING AGAIN:
Two things are being run by the government simultaneously one being contamination free cotton campaign and the other being hedge trading in cotton. The contamination free cotton has been opposed not because it is a bad move but it is indirectly hit by patronisers of the dirt-free cotton and directly by the ginners who are spinach pestered at the time sale that discourages them to say good by. But the people opposing hedge trading in country, such as ginners and the Minfal, a government organ, explains there is no harm without the system as the most hurt is grower whose lot government wants to improve.
Those who have ever favoured this hedge system had never voiced which could be taken seriously. The main argument against hedge trading is simple - it is against Islamic principles. While low voiced argument in favour is that it streamlines sales/purchase of cotton and in their words eliminates confusion (conflict) during the payment when prices go astray from the time actually buying took effect.
In favour argument is that exports are available who will manage the show without difficulties faced by people without knowledge. But it has never been clear what is the real hitches some ginners who had done the practice quite early at the instance of government and had faced the problem of selling at a premium rate said that it is lingering on because it involves a community who are not prepared to please authorities.
The issue is so light and not as serious with the system running quite smoothly can be let it go its present way. Taking for another issue contamination free cotton needs immediate implementation. It has certainly been causing some one billion dollar loss each year which should be saved. Some improvement and implementation steps are visible - cotton team going to various countries to see how contaminated cotton is made free of foreign elements, such as Italy and Turkey. If such spectacular gain is in implementing hedge trading system and once again some top religious men clear it as not being instance could be accepted and started. But it has taken too much time without yielding any result.
TAIL PIECE: The Liverpool based international cotton association (ICA) has seemingly banned Trading Corporation of Pakistan from cotton export business. The TCP had invited tender until August 13, 2005, it is keeping silent thereafter. The export business suspension comes linking the matter with defunct cotton Export Corporation which had allegedly suffered admonishing for ignoring certain established rules. Assumingly TCP was also viewed as repeating the CEC irregular practices and hence the defunct corporation had received notice to the effect in March 1996. The TCP should announce its future line of action after severe thrashing from IAC. That it will not go the defunct Corpn way is apparent as some more heavy duty like purchase and sale of sugar, and wheat etc.
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