Trading oscillates weakly because of high prices; KCA spot rate slashed to Rs 12,000

Cotton trading oscillated weakly, as prices kept consumer away at safe distance as sellers feeling strong with stocks to be lifted before arrival of new crop. The spot rate stayed firm until mid-week when slashed by Rs 500 to Rs 12,000.
WORLD SCENARIO:
The cotton experts took a sign of relief from the US government report last week that cotton-ending stocks were at there lowest in 80 years. However, US sowing size has been slashed in view of Texas, which grows maximum was likely to be hit by Al Nina, drought. The episode plus untoward conditions in Libya, ME, Japan and countries showing huge budget deficit bespeak ill about global recovery process.
Pak cotton yield has refused to budge despite loud need consumers put at 15 million bales. The cotton producers world over have been taking advantage of cotton, ensuring large production and safe from pests and virus attacks. China and India - the largest consumers and India the second largest cotton producer around 35 million bales for local needs as well as to supply countries suffering shortfall. India was bound by written accord to supply nearly two million bales but rising cotton cost held it back around to deliver Pakistan.
Pakistan, which suffered from devastating floods, is close to enter into a deal with Uzbekistan, Australia and Brazil are looking for deficit areas to supply them. Pakistan is likely to improve its production by sowing pure BT cottonseed, authorities are giving to understand.
On Monday the US cotton futures rebounded to a firm close on investor short-covering, as fibre contracts recouped the losses posted late last week. The key May cotton contract on ICE Futures US gained 1.61 cents to settle at $2.0458 per lb, trading from $1.9935 to $2.0773. The new-crop December cotton contract went up 1.10 cents to close at $1.3918. Total volume traded in the cotton market was around 26,100 lots, about five percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures crumbled to a weak close, as investors liquidated amid a broad sell-off in the commodity markets, and the bearish momentum could continue in the days ahead. The key May cotton contract on ICE Futures US dove 4.85 cents to settle at $1.9973 per lb, trading from $1.976 to $2.0608. The new-crop December cotton contract declined 3.62 cents to close at $1.3556. Total volume traded in the cotton market was around 30,500 lots, about a fifth above the 30-day norm, Thomson Reuters preliminary data showed.
On Wednesday the US cotton futures settled lower for a second day in a row, as funds and merchants sold amid weaker textile demand and price pressure from new-crop sales in the Southern Hemisphere. The key May cotton contract on ICE Futures US shed 2.38 cents to settle at $1.9735 per lb, trading from $1.967 to $2.0673. Second-position July sustained the biggest losses on the board by dropping 4.93 cents to close at $1.8064 per lb. The new-crop December cotton contract declined 0.86 cent to finish at $1.347. Total trading volume was around 42,200 lots, almost two-thirds above the 30-day norm, Thomson Reuters preliminary data showed.
On Thursday the US cotton futures ended down for a third straight session, under pressure from a disappointing weekly export sales report. The key May cotton contract on ICE Futures US fell 1.31 cents to settle at $1.9604 per lb, after dealing from a near two-week low at $1.9406 to $1.9788. Second-position July dropped 2.64 cents to close at $1.78 per lb, while new-crop December cotton shed 2.25 cents to end at $1.3245. Total volume traded in the cotton market slowed to 19,295 lots, about a quarter below the 30-day norm, Thomson Reuters preliminary data showed. Analysts said recent market weakness was sustained following the release of the weekly export sales report from the US Department of Agriculture (USDA).
On Friday the US cotton futures closed down for a fourth straight day, extending a pullback from the $2/lb level, as sentiment soured in response to another bearish outlook from Goldman Sachs. The key May cotton contract on ICE Futures US shed 0.52 cent to finish at $1.9552 per lb, near the bottom end of its $1.9425 to $1.9801 range. Second-position July closed down 0.60 cent at $1.7740 per lb, while new crop December dropped 3.27 cents at $1.2918. Trading volume totalled 15,742 lots, more than 40 percent below the 30-day norm, Thomson Reuters preliminary data showed.
LOCAL TRADING:
Karachi: continued firmer condition has restrained cotton trading resulting in just 700 bales of cotton sold between Rs 11,600 and Rs 12,500, spot rate stayed put at Rs 12,500 and no major change was marked in phutti prices in Sindh and Punjab. Consumers pressure has deterred price surge in quick succession but global rise won't block way and buying will, though in small quantity begin to keep mills running. Orders in hand leave no alternative but to lift cotton to spare from further loss.
On Tuesday cotton consumers turned to lifting taking for granted if they delayed, sellers will find some pretext local rains or global trend to add to already soaring prices. Nearly 7000 bales changed hands in price range of Rs 10750 and Rs 14500. Spot rate and phutti in Sindh and Punjab nearly stayed put.
Globally speaking, China seems to have backed inflation and started buying. Latest purchase was put at 276,400 tonnes in March, Indian latest arrival was positive up 1.1 percent.
On Wednesday sellers having no chance to keep prices at least at the previous level found utterly helpless and slashed spot rate by Rs 500 to Rs 12,000 but phutti rate in Sindh stayed put at Rs 4000, while in Punjab at Rs 5000. The buying pace bulged to satisfactory 2400 bales level. According to market sources uncertainties on the global level created ripple in markets here. The buyers are now optimistic about new crop in some weeks will force prices down. The global recovery, too, is indicating lag.
On Thursday sellers lowered asking prices following fall in demand world-wide. Market sources noted with a degree of pleasure that demand being low prices were likely to go further down. However, the apprehension about spinning mills going un-operational was not explained clearly, however, the bullish trend that has persisted for quite sometime was unlikely to persist.
On Friday business activity came down as the mills were still reluctant to buy due to financial crunch. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 12,000. In Sindh and Punjab phutti price of low type was at Rs 3500 and that of superior type at Rs 4500. In ready business, nearly 500 bales of cotton changed hands between Rs 11000-11200.
On Saturday lean business was again witnessed, as ginners did not lower the asking prices due to short crop. KCA official spot rate was unchanged at Rs 12,000. In Sindh and Punjab phutti price of low type was at Rs 3500 and superior type at Rs 4500. In ready business, nearly 1200 bales of cotton changed hands between Rs 10600-11500
UZBEK COTTON ANY DAY LIKELY IN PAKISTAN:
What actually restrained second largest cotton producer India to hold back duly under deal over one million bales will remain enigma for years to come. However, the fact that some ray of hope was sighted at the end of the tunnel-Uzbekistan will supply the requisite quantity at terms that is consoling, as certain percentage may be cleared later. However, efforts are on the way to seek special waiver from Taskent's parliament on relaxing procedures for import of cotton.
The delay that has caused by unduly holding back cotton that should have been delivered by now. No Uzbek procedure will have to be harnessed in order to induce Uzbek government to agree to special waiver. In other words payment should be made in Pak business procedure, stakeholders here expect some leniency from Uzbek government to match the delivery would have cost at the Wagah borders. Pak importers know well that Uzbek government would be realistic keeping in view the world cotton rate, which has doubled turning it to as favourable as prevailing in November last year is like day dreaming.
BALOCHISTAN TO GROW MORE COTTON, VERY LATE, THOUGH:
Authorities are planning to grow cotton in 19 Balochistan districts or sow it on 0.15 million acres from current 0.1 million acres, paucity of cotton was in subconscious of growers as they proudly would display pristine flash free of dirt and dust. The Balochistan cotton is disturbed least from picking and packing. Initially 19 districts have been set apart comprising Nasirabad, Bolan, Sibi, Dera Bugti, Khuzdar, Chaghi, Jafferabad covering over 0.15 million acres this cotton season, which has begun. Only experts can certify whether Balochistan cotton type is sought by some who insist of standard cotton and drain out tons of money on imports.
This year this exercise has caused more money and more delay and pains as import is being planned from Uzbekistan miles away from Pakistan. Authorities are also hell-bent-to grow cotton to the tune of 15 million bales. This is what the consumers outright put their need, which probably cover the useless imports too. The cotton report has been away a lot from normal. It contains two more names - olive and palm dates, which speaks loudly that oil seeds are being aimed at. Cottonseed too is exploited for oil for ghee and soap manufacture.
TEXTILE INDUSTRY IS EASY PREY:
Whoever felt or said this seems convinced unfortunate textile industry has no way out. Strange it sounds, no. God has bestowed upon Pakistan rich agri land to grow ample food grains and cotton to wear attire of likes. But man has before it choice, which for ten decades has allowed greens to turn grey. When anybody boasts of God gifted land he not only has in view varieties of grains and cotton but tons and tons of coal, millions and billions cubic feet of gas and oil wells. The authorities, who could comprehend the priorities should have gone for excavation and drilling, took refuge in accusing the government they took the burden from.
The story is repeated after every three to four years. Thus the need for various essentials was felt but efforts to build huge dams remained victim of indifference or artificially made up disputes. Taking one-Kala Bagh dam is talked every turn of new government and ultimately nearly forgotten until deluge over look and over whelming by submerged came in its route. The cost in thousands and lakhs have surged to crors but importance continue to be debated and then lack of political will, as usual let the dam slip.
Today louder voice is heard about enhancing exports day in and day out but industries all know are the easy prey and in near term hoping for better is an impossibly.
JAPAN ASKED TO RELOCATE INDUSTRIES TO PAKISTAN:
The Government of Pakistan in look out for gainful opportunities has officially asked Japan to part with it intent to relocate in preferably ASEAN-or the countries close by. Pakistan has considered itself qualified owing to dragging economy and mini Tsunami Pakistan was struck some months back. At the very outset prayers are such be falls God spares countries like the one Japan was hit some weeks back. Pakistan's request it is hoped has been made properly and proves result oriented. Japan knows this country and the industries notch, which shoulders the country's sagging economy.
Following the disastrous earthquake and tsunami Japan understandably plans to relocate 150,000 industries to some ASEAN member countries. It may be recalled Japan had carried out similar exercise when powerful earthquake had hit-Kobe in 1995. Pakistan wanted to be involved in the relocation plan and had shown interest in Japanese industrial units more preferably textiles. Japan has since long been machinery suppliers and importer of textile products, Japan particularly is aware how badly Pakistan is farming despite vast potential. The Japanese diplomat was receptive of the request and premised request will be communicated to Tokyo. Since Japan is aware of Pak plight, it is expected it won't sift-too much and communicate back in positive nod.