Cotton trade continues downward drift world-wide; KCA cuts spot rate drastically by Rs 1,500

Cotton trading continued to drift down during the week under the daunting effect of world trend, which is still raging high but won't remain too long. Dwindling cotton yarn demand affecting market sentiment negatively. As a result KCA reduced spot rate drastically by Rs 1500 to Rs 10500 during the week ending on April 23, 2011.
WORLD SCENARIO:
Heartening news from Australia is aired for those who will be hit by natural calamity or for any reason, because this country is headed for said to be another bumper crop. Uzbekistan too is all surplus area, which can supply deficit areas, though it has to pass through parliament. Some constraint is expected from African countries for disturbed conditions more so in Burkina Faso where army revolt is sagging. The disappointing report is from the US where more knowledgeable see decision to drop much lower than expected 12.566 million acres (5.083 million hectares), perhaps with idea that cotton prices won't, be hit. It however, restive conditions in Libya, Africa and Middle East besides Japan could dim textile products demand and in return cotton and products prices may dive-down.
More still will depend on development affecting the cotton crop production. In Pakistan such devastating deluge followed by floods took unaware. Added to this problem was India's blatant refusal to deliver complete supplies of contracted deal.
On Monday the US cotton futures ended up for the first time in five trading sessions, influenced by strength in the grains markets and ongoing concerns about drier weather in the Southern part of the country. Cotton's gains bucked the trend in the broader softs complex, which came under pressure from Standard & Poor's negative outlook on the United States' top-notch credit rating. The front-month May cotton contract on ICE Futures US firmed 0.93 cent to end at $1.9645 per lb. Most-active July closed up 0.76 cent at $1.7816 per lb, after dealing between $1.7316 and $1.7980. New-crop December cotton rose 1.45 cents to $1.3063. Trading volumes picked up from last week. More than 31,800 lots were traded by the close, more than 20 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures fell and held onto a steep loss into the finish, with rollovers hitting May futures and ample supplies overseas threatening later-date contracts. But persistent dryness in the Southern United States underpinned contracts dated beyond December. The front-month May cotton contract on ICE Futures US slid 6.63 cents to close at $1.9010 per lb. Most-active July slid the downside limit of 7.0 cents to finish at $1.7116 per lb. It fell from a session high at $1.7910. New-crop December cotton's decline was a bit more modest, closing down 1.90 cents at $1.2875 per lb. Trading volume slipped to 28,191 contracts, down from 31,871 lots traded on Monday, though about 6.7 percent above the 30-day average, according to Thomson Reuters preliminary data.
On Wednesday the US cotton futures tumbled again, with most of the decline in nearby contracts attributed to switches ahead of first notice day, and some brokers said negative technical charts and ample supplies anticipated in the global market have also pressured prices. At least 10 to 15 cents of the price decline is dry weather," said Jobe Moss of MCM Inc in Texas. The front-month May cotton contract on ICE Futures US tumbled 6.65 cents to finish at $1.8377 per lb. Most-active July was also sharply lower, falling 4.10 cents to end at $1.6740 per lb. New-crop December cotton settled with a small 0.29 cent gain at 99.90 cents per lb. Brokers were somewhat puzzled about the degree of the price drops. But, with first notice day for May futures approaching on Monday and one more day left to trade the contract with markets closed for the Good Friday holiday, many players holding May cotton have been anxious to sell out all week. Trading volume slipped to 26,859 contracts, down from 34,202 lots that changed hands on Tuesday, according to Thomson Reuters preliminary data.
On Thursday, the US cotton futures closed higher, bouncing off a 2-1/2-month low hit early in the session. Cotton ended the week sharply lower, pressured by rollovers out of May futures. But on Thursday, this selling gave way in anticipation of the start of May deliveries, set to begin Thursday evening. ICE Futures US commodity markets will stay shut for the Good Friday holiday. Cotton No 2 will reopen electronic trade at its regular opening time on Monday. Front-month May cotton on ICE Futures US rallied 3.50 cents to end at $1.8715 a lb. Most-active July finished with 0.45 cent gains to close at $1.6794 per lb. July slipped as low as $1.64, a level last seen on February 7. New-crop December cotton jumped 3.34 cents by the close to $1.3214 cents per lb., a 2.59 percent gain.
On Friday, the US cotton market was closed for the Good Friday holiday. Cotton No 2 will reopen electronic trade at its regular opening time on Monday.
LOCAL TRADING
Modest trading was witnessed on the cotton market thanks to sellers who had no reservations rather offered consumers on demand. Some market sources opined that profit taking was also seen. The ginners preferred to sell low quality cotton to the spinners. In all 3000 bales of cotton was lifted at prices ranging between Rs 10550 and Rs 12000.
The yarn makers and yarn buyers are at odds once again. Some month's back authorities had intervened and some sign of relief was marked. The spot rate was unchanged at Rs 12000. Phutti low type could be obtained at Rs 3500, while the other (better) was ruling at Rs 4500.
On Tuesday spot rate was slashed to Rs 11,500, as bearish sentiment forced such action said to be bearish interest in the world at large. The spot rate was lowered by Rs 500 to Rs 11500, phutti in Sindh and Punjab low type was at Rs 3000, while the better type was marked at Rs 4000. Nearly 1600 bales of cotton changed hands in price range of Rs 10,000 and Rs 11000 sellers looked pretty worried over dwindling prices, while consumers looked for raw material which was in short supply and priced high.
On Wednesday prices eased across the board vivid outcome of low demand. The spot rate was down for the second days in running-by Rs 200 to Rs 11,300. On ready market 300 bales of cotton changed hands ignoring down drift hoping further slippage in rate. The cotton was lifted in price range of Rs 9200 and Rs 11,500. Phutti prices ruled at Rs 3000 and Rs 4000 depending on quality. Pak sellers, reluctant though have bowed head finding no way out.
On Thursday cotton market sustained slumping trend, KCA lost further Rs 300 to Rs 11,000, phutti continued around Rs 3000 to Rs 4000. Only two thousand bales changed hands at Rs 9200 and Rs 11600.
The local trend, which for disturbed conditions in Africa, ME and Japan is causing the difference, however, the new scenario locally seems to profit exports of textile products, sign are being reported for some months.
On Friday steep fall was again witnessed in the official spot rate for the fourth day, besides, the ginners got panic and started selling unsold stock following the talks of imports of cotton from overseas market after sharp decline in the rates. Karachi Cotton Association (KCA) official spot rate slide continued, down further by Rs 500 to Rs 10,500 in a single day. In Sindh and Punjab phutti price of low type was at Rs 3000 and that of superior type at Rs 3500. In ready business nearly 1400 bales of cotton changed hands between Rs 9,400-10500.
On Saturday falling trend persisted, as prices showed softness because mills kept to the sideline in expectations of further decline in the rates. Karachi Cotton Association (KCA) official spot rate was unchanged Rs 10,500. In Sindh and Punjab phutti price of low type was at Rs 3000 and that of superior type at Rs 3500. In ready business nearly 1100 bales of cotton changed hands between Rs 9,000-9750.
CAMERON PURSUING PAK CASE WITH EU FOR GREATER ACCESS
When young and energetic British PM landed in Islamabad on April 5, 2011, the topic and talks that could be held understandably, which was of interest of the world. But Pakistan who are always looking for cementing unwarranted dents were innocent look and Cameron, as welcome guest found no way out but to communicate. The surprise aspect that followed was nearly instant.
Earlier when an EU influential member was murmuring over trade package for Pakistan, Cameron poked nose then and it worked like a solution. The package was sent to the WTO panel with firm hope communicated that first week of January 2011. But in March when Cameron was here, the package was twice invalidated on presumably grudged verbosity and most likely an odd sort.
The WTO is today ageing without some odd guys staying out despite over a decade efforts of its chief Pascal Lamy to take in fold all so that the world poor know the taste of smiles and daily two square meals.
One major member out of the fold is Russia. Again some odd fellows stick to their whimsicality. While the bulk of WTO members, rather are not bothered, supper powers impose so-called Human Rights violations. Who can count on fingers WTO remaining in lurch how many is roaring hungry on roads, dying in hospitals in the absence of proper treatment and school going children abound rush-ridden pavements with a wooden box, brush, some branded black, pink and prey polish boxes.
COTTON GROWERS CAUTIONED AGAINST RAIN EFFECTS
Never before had quarters been so much fretful about cotton crop, as they seemed today. Cotton and cotton products were rightly known as backbone of lurching Pak economy. Taken agriculture as a whole, offering vast potential both for food and wears and so much in abundance to rise as much as we like plus supplies deficit areas. Unfortunately the potential has little been recognised.
Truly speaking, but with a notch of guilt, those who have enjoyed the multiple gains, done practically nothing. Yes, they have without a change in tone and tenor, called the booty forced upon. Being an agricultural land, needed all water coming from upstream to be preserved. But only 13 percent water is said to have been preserved the rest is allowed to stream down to the seas. If ever in low tone sort of concern is given vent to is that India has not been fair in releasing water when Pakistan needs but is very open minded when water causes devastating floods. There are about half a dozen prospective dams debated and then forgotten, like Basha Dam, Kalabag Dam, the cost bulges with every passing day.
The Punjab Agri Dept. very graciously had advised cotton growers to take timely precautionary measures to save cotton crop from rain effects. Those sources who have seen sufferings time and again wished the authorities should have ever cared to just develop what the God has gifted us all.
WTO IN SERIOUS CRISIS
After Doha round around a decade back keen watchers had started expressing deep concern about its very existence. The EU's Pascal Lamy, currently WTO chief a hard working and honest chief to see WTO is through a "pacca" deal, had all along been poking it may not end up in all's well. Now S Africa's trade minister Rob Davies commenting at an annual global forum in southern Chinese Island warned that WTO round launched in 2001 could be inconclusive amid on rift between developed and developing nations on tariff cuts on industrial goods and farm subsidies.
The philanthropic sorts who learnt WTO sent through veins of poor people they only had heard. That Doha outcome would boost the global economy by around $170 billion annually. But then nobody seems around to see the flourishing economies coming closure through regional pact. America has such deals with South Asian countries have their own, so the smaller and less prosperous like Pakistan, India, Sri Lanka, Bangladesh and countries in Africa have FTA like pacts. Thus a giant like WTO with enormous offer have never been allowed to come in limelight. The only disappointing move that WTO is said to have taken was that flood ravaged Pakistan was kept at bay from trade package from the EU.
COTTON CROP MAY FACE WATER SHORTAGE
The Sindh chamber of Agriculture has voiced serious concern over likely acute water shortage at the tail end of the water channels and urged government to immediately take steps to ensure supply.
The meeting held the other day pointed out due to shortage of water growers would not be able to cultivate cotton. The meeting charged with illegal sanctions of patri minor from Nara canal, and Benazir minor from Rohri canal to influential growers of Sindh. The aggrieved appealed CJ of Supreme Court of Pakistan to take immediate notice of the illegal sanctioning of mentioned four outlets.
It needs to remind authorities that none-else but the president himself has asked growers to go for producing 15 million bales. The orders in hand for textile products plus rising cotton price globally to propel cotton at least to the size of 15 million bales. Indian exporters' failure to honour signed accord to supply cotton should act as warning to produce cotton to the level of Pak needs. The experts are not exactly sure, which way cotton prices are going to take to. This is however, somewhat clear that despite using more acreage and production likely to rise slump in demand restrain prices.
Anyway, tightening belt for grow more cotton is the need of the hour to look haplessly to excess growers like USA and India.