SHAFI AHMAD SYED

The devastation wrought by floods plus other ingredients together have caused cotton prices to surge from Rs 1500 to Rs 2000, by all means extra-ordinary, which may restrict demand. The players are hopeful cotton growing countries will go for higher plantings.
WORLD SCENARIO:
Cotton futures globally, has skyrocket and has reached all time high $2.12 per pound, being the highest ever. Keeping these facts at a distance and weighting plight of Pak cotton importers who now nearly have given up hope to get their one million bales. How Pak textile exporters will rub shoulders with rivals when home grown cotton is being offered at Rs 10,000 to Rs 14,000 per bales against Rs 4000 / 5000 bales at the outset of the season. China is sailing on the same boat, as heavy rain and bad weather had mould production who hoped India expecting 31.2 million bales during 2011-12, according to Cotton Advisory Board will now have to look at American surplus where prices have shot up two straight days.
This India views to cotton availability to its mills with concern. Obliging China with its need is an impossibility, China seems to have been nearly out of inflation concern and may concentrate on acquiring cotton. In conclusion and make write up comprehensible, the cotton traders will focus attention on plantings, cotton demand and consumption.
On Monday the US cotton futures closed higher on speculative buying but profit-taking knocked fiber contracts from record highs after the market rose the daily limit during the session. The key May cotton contract on ICE Futures US rose 1.44 cents to finish at $2.1414 per lb, dealing from $2.1313 to the 7-cents limit up at $2.197. Volume traded on Tuesday though stood about 28,400 lots, over 10 percent below the 30-day norm, Thomson Reuters preliminary data showed. But open interest in the cotton market did not seem to be matching the surge in prices to new record highs.
Open interest in cotton stood at 175,284 lots, as of March 4, a modest rise from the seven-month low at 174,074 lots, as of February 28, data from ICE Futures US showed.
On Tuesday the US cotton futures finished the daily limit down on investor liquidation, as the mill and speculative buying which powered the market to record highs dried up for the moment. The key May cotton contract on ICE Futures US fell the 7.00-cent limit to finish at $2.0714 per lb, with the day's top at $2.1575. Lou Barbera, cotton analyst at brokerage house VIP Commodities, said the correction may take the May contract down to the region around $1.9725. That would represent a 50 percent retrenchment of the rally, which took off on February 25 and hoisted cotton prices to all-time highs. Volume traded on Tuesday though stood about 28,400 lots, over 10 percent below the 30-day norm, Thomson Reuters preliminary data showed. But open interest in the cotton market did not seem to be matching the surge in prices to new record highs. Open interest in cotton stood at 175,640 lots, as of March 7, up from the seven-month low at 174,074 lots hit on February 28, data from ICE Futures US showed.
On Wednesday the US cotton futures closed lower on investor sales, as most players finished adjusting positions before release of Thursday's government crop report. The key May cotton contract on ICE Futures US fell 2.73 cents to finish at $2.0441 per lb, trading from $2.0248 to $2.134. Open interest in cotton, an indicator of investment exposure in cotton, fell to near a 7-1/2 month low at 173,688 lots, as of March 8, data from ICE Futures US showed.
On Thursday US cotton futures closed lower mostly on spread trade and investor sales, as players paid little heed to a pair of government reports. The key May cotton contract on ICE Futures US fell 3.43 cents to finish at $2.0098 per lb, trading from $2.0038 to $2.0771. Open interest in the market, an indicator of investment exposure in cotton, stood at 175,133 lots, as of March 9, recovering slightly from the 7-1/2 month low at 173,688 lots, as of March 8, data from ICE Futures US showed. There was no discernible boost given to the cotton market by the reports from the US Agriculture Department (USDA), which the trade believes should have had a bullish impact on fibre contracts.
On Friday the US cotton futures settled higher on investor buying to end a three-day losing streak, as fiber contracts bucked early weakness in the commodities sector from the massive quake in Japan. The key May cotton contract on ICE Futures US rose 3.96 cents to finish at $2.0494 per lb, trading from $1.966 to $2.0798. On the week, the market was down 3.65 percent. It was the first weekly loss for cotton futures in nine weeks. Traders said activity was dominated by technical considerations. The market's session low of $1.966 is roughly the 50 percent correction in the market from the February 25 low of $1.7815 to the Monday top of $2.197.
LOCAL TRADING:
Under pressure of foreign trend, prices in Pakistan surged such as spot rate raised by Rs500 to Rs 12,500. The phutti rates in Sindh and Punjab for this day were Rs 4500 and Rs 6400, respectively. Nearly 8000 bales of cotton changed hand at Rs 14000, market operators said. They expressed prices may maintain onward rise.
On Tuesday rise in ready buying was marked following surge in spot rate a day earlier. Nearly 500 bales of cotton changed hands at Rs 13000 and Rs 14500 (on credit). Buying is seen restricted, as arrivals are stated to be rare while prices are quoted at higher level. The cotton consumers, however, will watch sellers attitude before lifting.
On Wednesday spot rate was raised by good another Rs 500 huge boost to Rs 13000 nearly 1500 bales of cotton changed hands at Rs 14000 and Rs 14,500. The local scenario change was not seen, as cotton contract fell the 7.00 cent limit. Phutti in Sindh ruled at Rs 4500 and in Punjab it was quoted at Rs 6400. The market sources observed that it was surprising that world trend is followed when prices surge but sellers take time to revise prices downward when contract lose globally.
On Thursday prices stayed easy sort as sellers realised any bid to act giving bad odour wont pay. Thus spot rate, phutti in Sindh and Punjab stayed inert. However, 3000 bales of cotton changed hands at Rs 12700 and Rs 13500.
On Friday spot rate was unchanged at Rs 13000. In Sindh and Punjab Phutti prices of low type were inert at Rs 4500 and superior variety came down sharply by Rs 400 to Rs 6000. In ready business nearly 1000 bales of cotton changed hands at Rs 13200-13500.
On Saturday Official spot rate came under pressure and KCA brought it down, as a result of falling daily intake by the mills and spinners. Karachi Cotton Association lowered spot rate by Rs 300 to Rs 12,700. In Sindh and Punjab Phutti prices of low type were at Rs 4500 and superior stayed put at Rs 6000, they said. In ready business, nearly 1200 bales of cotton changed hands at Rs 12500-12800.
COTTON CESS TO BE INCREASED BY 150PERCENT
When increase is involved, be it price or tax or like dreaded things, one who is going to be affected gets surrounded by loss fear. Cess is as a tax and as unwelcome, as any other surcharge or duty but cess is always for improvement and development without which business and exports can hardly prosper and flourish.
In the present case federal government had decided to increase cotton cess. The increased amount will go to Pakistan Central Cotton Committee (PCCC), a body corporate under the administrative control of Ministry of Food and Agriculture engaged in pursuing the national cotton research and development and the research and development programme (R&D) activities are met from cotton cess levied on the bales produced in ginneries. The last time rate was fixed at Rs 20 per bale on July 1, 2006.
The report makes no mention of ginners opposition initially but submitted on conviction money will certainly be spent on research and development.
Till date quarters close to PCCC body disseminated cess money was spent besides letting people know the ginners paid entire cess money. The answers remaining blank, commands authorities keep keen eye on cess collected and spent properly ensuring development to help build economy on sound footing.
INCENTIVE TO GROW 16 MN BALES OF COTTON
Nearly a quarter dozen agriculture research (centres) Institutions exist in the country but worthwhile outstanding work still remains to be desired some varieties of mediocre cotton seeds have given Pakistan a third or fourth place both in matter of quality and production. Despite call for cotton consumers to grow more cotton, a minimum of one or two million bales have regularly been imported unfortunately on plea that world standard cotton for cotton products are a must, though a bulk of forex earned is drained out on imports.
Cotton exporters sneak some bales out to countries does not grow cotton at all. The local consumers offer tough resistance to exporters, as under the circumstances prices go up, which takes away export edge. However exporters keep supplies restricted subject to availability. This season cotton crop suffered two million bales damage, exports stood at just 517567 bales. The crisis perhaps gave insight to authorities give a fresh call to grow more cotton putting stress on producing new varieties of cotton.
The cotton committee decided that research institutions coming up with new varieties would be given major share in the marketing rights apart from bonus for individual scientists. The scientists would do well to work on varieties that resist threats to cotton crop from leaf curl virus and white fly particularly in Punjab. Such important meeting however, made no mention of BT cotton, which gives manifold yield besides is resistant against pest and viruses. India and China have tried BT 2 cotton and are reaping good harvest.
MEGATECH 9TH EDITION KICKED OFF
By the time this write up will be in hands of readers the exhibition would have possibly been over in Expo Centre Lahore with success. Since Pakistan is not in the field of textile machinery making or may be makers do not want to let buyers know how useful they are, generally speaking left open to the foreign buyers. Very little is seen experts writing on the subject so that efforts are appreciated and improved for more demand.
It looks pretty strange, textile exports, were dragging feet produced result now is quoted with a degree of pride has achieved 26pc gains. Unfortunately textile sector being such huge forex earning and offering maximum number of unemployed, has only cotton and workers available. The textile machinery over which billions of dollar are spent and wide varieties of dye and chemicals subject to draining out bulk of earning in acquiring from India and China queer enough both being die hard rivals. What investors get in return for - after feeding himself and family to survive. Or, do they prefer to dump earned money instead for re-invest and get money thus multiplied.
Leadership some 30 years back had stressed on tractor assembly and Taxila complex is exporting built-up sugar plant to about half a dozen countries since then. A source close to cotton and textile mentioned Textile Machinery Manufacturers Association but was not clear about its contribution to industry and economy.
2 MILLION BALES DESTROYED BY FLOODS
There will not be any extra-ordinary set back in exports of textile made-up from shortfall in cotton. The two million bales lost from heavy rains and floods plus India going back from its deal entered with Pakistan importers over one million bales of cotton. Any hue and cry over cotton shortage for whatever reason is waste of time and calls for pressing authorities to make regular supply of power and gas.
According to exporters there is no dearth of orders and they have been keeping no secret that stocking on our part could lead importers to indicate orders be transferred to China, India or Bangladesh. The cotton exporters who were approached were obliged with only 517567 cotton bales, evidently much less than they used to supply customers in the past year. This may be seen in view of the daily rise in prices, which broke past 100 years of peak.
The textile exporters purchased 10,590,272 bales and except unholy setback that India continues to be adamant to hold back deal duly signed around April.
The Pakistan cotton importers have option to receive supplies, of course, higher rate than they had struck deal with India, from South Africa and if possible America and elsewhere. The authorities have now to issue orders for regular supplies of gas and power, without going back for a day, as has been observed and claimed by the textile made-up exporters.