KCA spot rate, domestic cotton prices tend lower in line with US futures

Cotton rates finally crashed towards the end of the week - from beginning the spot at Rs12000 ended on Thursday at Rs11800.
WORLD SCENARIO:
When markets in New York reopened after President Day holiday on Tuesday, cotton futures was down sharply - by seven cents a pound on two counts, primarily because of contract delivery as speculators sold March down two week low. Secondly, China cotton was selling lower. But the major players would see prices soaring leading to slip in cotton demand. Many players promptly indicated instances of order postponement also. The most stock markets showed down trend, grain markets too turned lower. They pointed out volatility always at hand - who could say a fortnight back Arab world was ripe for tremors of type unheard of so far in that region.
India was planning to earn from cotton owing to rising prices. This country went to the extent of holding back over one million bales of cotton duly sealed weeks back. On worries in this country, Indian cotton authority in Pakistan recently advised to press exporters to deliver. But that proved in vain. Pakistan has not apparently looking around - S Africa or America but what's the way out? The government efforts plus exporters zeal proved to be gainful. Thus exporters of textiles will have to avail from any quarter. However, the textile exporters worry is genuine that made-ups cost won't be palatable. China has tackled inflation. Experts expect China will care on exports.
On Tuesday the US cotton futures slid to their seven-cent downside limit early and stayed there until closing, as sellers who could not get out of a tumbling market last week ran for the exits once trading resumed at the end of a three-day weekend. Most nearby contracts settled locked at their downside limit of seven cents a lb. Benchmark May cotton on ICE Futures US finished seven cents, or 3.59 percent, lower at 1.8793 dollars. March cotton fell even further, settling 4.61 percent, or 9.08 cent, lower at 1.8794 dollars per lb. The contract's delivery period began Tuesday, meaning that seven-cent trading limits do not apply. As a result, speculators sold March futures down near a two-week low of 1.7720 dollars in overnight trade, before buying it back at the close.
On Wednesday the US cotton futures finished with hefty losses, but nowhere near the seven-cent downside limit reached in the prior two sessions as speculative spread selling seemed to have lost steam. Risk aversion that pressured cotton a day earlier also eased and speculators refocused on concerns over tight supplies, which had helped run fiber to records above $2 a lb. "Supply and demand seems to be trumping the fear factor," said Keith Brown of brokerage Keith Brown and Co in Moultrie, Georgia. March cotton finished down 1.38 cents, or 0.73 percent, at $1.8656 per lb, but fell as low as $1.8090. March's open interest has ebbed to 1,100 contracts, with May futures carrying open interest of 18,096 lots. New benchmark May cotton on ICE Futures US settled with losses of 3.7 cents, or 1.97 percent, at $1.8423. The session low was $1.8093 a lb. March cotton fell even further, settling 4.61 percent, or 9.08 cent, lower at 1.8794 dollars per lb. The contract's delivery period began Tuesday, meaning that seven-cent trading limits do not apply. As a result, speculators sold March futures down near a two-week low of 1.7720 dollars in overnight trade, before buying it back at the close.
On Thursday the US cotton futures finished lower for a fourth straight day, as a USDA crop report showing big crop plantings in some agricultural commodities triggered hefty selling in the cotton market. March cotton finished down 5.28 cents or 2.8 percent at $1.8128 per lb, having traded in a range between $1.7900 per lb and $1.8507 per lb. Huge US corn and soybean plantings this spring will likely fail to refill razor-thin stocks enough to quell the surge in grain prices, the US Agriculture Department said.
On Friday the US cotton futures surged to their upside limit, after spending most of the session in negative territory, but brokers said the gains were made on very light volume initiated by speculative buyers.
March futures, currently in the delivery period, which eliminates the price limit, advanced by a greater amount than later-dated contracts. March cotton ended 10.06 cents, or 5.55 percent, higher at $1.9134 per lb, after shooting to a 10-day peak at $1.9250 a lb reached in a very short span of time. March volume was a mere 190 lots. Similarly, benchmark May contracts, which traded sharply lower for most of the session, suddenly advanced by the upside limit of 7 cents, a 3.95 percent increase, to $1.8423. Volume in May contracts came to 9,375 lots. Contracts through March 2012 also rallied to their upside limit, with the rest finishing with substantial gains.
LOCAL TRADING:
The very opening session of the week braced for as Rs200 rise in spot rate to Rs12,000 highest of this season, phutti was unchanged in Sindh and Punjab at Rs4500 and Rs5900 and users lifted nearly 3000 bales of cotton in prices between Rs12000 and Rs12,500. The buyers with an eye on prices in China at low rate slowed down buying but sellers with lower stock to run until the season held on the prices at record.
On Tuesday the consumer wait for easier rate the sellers refused to budge in prices. Spot rate was unchanged at record high, while phutti in Sindh was unchanged but in Punjab saw a loss of Rs400 to Rs5500. The global price's downward drift was largely taken for granted lent the sellers in this country seemed only slightly so convinced.
Adamant sellers bowed to the global sharp down turn putting pressure on them to slash spot rate by Rs200 to Rs11,800 while holding back prices firm on ruling size. Sindh phutti held to it ruling level, while phutti in Punjab had another set-back falling by Rs200 to Rs5300. Sources reported around 10,000 bales of cotton changed hands sold at Rs11000 and Rs12500. Market experts assessed trend this way: parts of ginners unwillingly sold some stocks taking for granted they are thus saving from future loss. But others tarried whether they were right?
On Thursday lean business was witnessed on the cotton market where spot rate stayed put while phutti rate was sharply down by Rs500 in Sindh, while in Punjab downward drift was marked at Rs100 to Rs5200. Market sources were expecting Sindh fall though they were reluctant to forecast similar trend. Around 1000 bales changed hands between Rs11250 and Rs12700.
On Friday (KCA) official spot rate was unchanged at Rs 11800. Phutti prices in Sindh and Punjab were unchanged at Rs 4000 and Rs 5200. Approximately 5,000 bales of cotton changed hands between Rs 11000-12200. According to the market sources the mills were active to meet some urgent requirements. In the meantime, the ginners did not show any interest in lowering the prices due to short stock with them.
On Saturday moderate business was seen as the ginners adopted flexible attitude to dispose off low quality cotton. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11800. Phutti prices in Sindh and Punjab were also unchanged at Rs 4000 and Rs 5200. About, 7,000 bales of cotton changed between Rs 10750-12000.
TEXTILE MINISTRY'S FATE:
Seems textile ministry's fate has changed for the better, after over a 60 years period when finance or commerce ministry used to be the "nurse". Quite often voice could be heard exporters were calling for an umbrella - known as 'ministry'. But governments had turned deaf ears to the frequent calls without stressing the fact that countries so called rivals had long been decorated with textile ministries, which set considered path leading to ever increasing textile exports unlike this country where value-added products kept starved of raw materials and so called highest forex earner singly stayed stuck up around six to eight billion dollars. The other need ultimately was felt for a ministry and efforts to beef up exports to inject strength in unsavoury economy.
Apparently, so appeared in recent days that textile ministry had proved its worth - and had path built smoother yet, could push textile exports to 15 billion dollars to 20 billion dollars is not too distance a future - say 2015. But condition danced before the sickening government to change the face of cabinet and its members and shocking for some textile minister was among many to be sent home.
The textile minister who lost job was praised for its work that led to 20pc higher exports for measures. The minister who has been taken off the cabinet and was sent home value-added sector will remember for such time the newly installed textile minister "under whose dynamic leadership and guidance, problems of value added textile industry would be amicably solved". The cherished hope will materialise will be awaited. The new comer will face textile year 2011 and steps that will be taken will better the textile exports as a whole and build economy strong and stronger.
COTTON OUTPUT 9.8PC DOWN UP TO FEB 15:
Pakistan will have to go without over 12pc cotton suffered by devastating floods that caused damage to hundreds thousand houses, bridges, roads and health of people. No doubt the floods did not sound bugle of its coming and damaging as a consequent. But engineers, economists and those with slight intention could warn they are around. The engineers and economists who always have been stressing to tame natural or the racing flood water let loose by neighbouring country to avoid the loss this country ultimately had to bear.
Some dams are kept on hold to spare people from floods or from hurting the crop for want of water thus with passage of every day, millions of dollars are on the surge of nation decides to build dam - say Kalabagh Dams. The efforts are on for the last six decades, but action succumbs to ideal of democracy. Majority must give in even though it may lead to the dwindled economy this nation laments when they are working on annual budget or faced with some project without which exporters cry hoax they are faced with high cost of doing business. The sustained crux has led us to this passe our next door neighbour manages low cost onion from us lent holds back over our over one million bales of cotton to press us to forget finalised deals and prepare mentally to enter new deal with higher cost?
INDUSTRIAL UNITS GET SICK:
May be similar experience coming in the way of industries in India and China for next door rivals. But the annual feature or even quicker frequency they occur in this country created in the name of all good where ethics should be hallmark of daily life. The industries have been linked with bank loans. Billions worth loans or so called bad loans, are being under scrutiny of the Central Bank with hopes that part of the loan many be recovered from some to feed back the kitty.
However, the current topic is wide a part as many as 30 industries became sick out of 200 units set up in phase I of the Site estate on Super Highway and are related to textile, pharmaceutical, machine vendors and rice mills.
The factors that led to the sickness of units were stated to lack of infrastructure such as water, roads, electricity shutdown said to have forced these units closure. Any way report does not mention any discrepancy about bank loans. Relevant people who have been mentioned speak widely different ills that have bewildered the owners who are still on way to give some shape to the industry.
Raja Ilyas Chairman Super Highway Association of Industry when approached recounted lack of infrastructure such as water, roads, electricity etc. The Site Ltd, which manages the estates revealed it had no funds to develop infrastructure in the estate despite the fact that it collected millions of rupees from allotment of plots. Secretary Industries Zamir Ahmad Khan had strange complaint that over and above the problems torched, owners are approaching for property tax.
DOUBLING COTTON OUTPUT WITHOUT BT SEED:
A couple of years back, some forward-looking men floated the idea of some knowledge-based sector to replace textile exports. They had not only static cotton production in view but high cost of doing business, which was hardly to be done away with.
But now it is perhaps forgotten matter and cotton and textile exports remain on top. Once again Punjab government plans to double cotton output from eight million bales to 16 million bales. This decision sounds utterly clear cotton and textile sectors remain the backbone and strong point for the dwindling economy.
The advisor to Chief Minister Punjab Sardar Zulfiqar Khosa, while speaking at the inaugural session of the 5th meeting of Asian Cotton Research and Development Network said that greatest challenge for Punjab Cotton is infestation of CLCV. He, however, did not go beyond expressing regret, cotton market sources have often expressed shock and regrets have resoundingly questioned, as to why the research carried on this deadly CLCV disease has not been brought under control. They referred to money spent on "research" but the result found no mention anywhere. Similarly, today higher cotton production talks have been frequent but BT cotton a must for doubling production is taken in whispers. Once again BT is mentioned how seriously only authorities know.