Interest rate cut by SBP provides incentive resulting in lucrative cotton buying at ruling prices

Lucrative cotton buying was marked following SBP's drastic 1.5 percent cut in interest rate, which injected among buyers urge to lift cotton at available favourable rate, spot-rate began at Rs 6300 and stayed Rs 6450 until Wednesday, on Saturday close was at Rs 6250.
WORLD SCENARIO
India would like to supply cotton to China and may be a bit is accepted. But Brazil will be a main supplier, which will replace America. America has increased quantity of cotton production, but China will refrain on price count - which has come down to 98 cents a pound. The shrink in price is further expected when surplus countries start vying for exports. The falling cotton value rate has not deterred Brazil to cut short rather decided to raise the production, over looking other grains.
The growers up ready to invest around $700,000 for growing cotton. The enthusiasts are undeterred, as latest world stock has been placed at 124.19 million bales, against much shorter figure 122.19 million bales. The growers in Africa are obliged that Brazil helps them to grow without apprehension of loss.
Pakistan, second successive year hit by deluge has lost, said to be around 30 percent. But still hopes to harvest around 12 million bales. So far it has not announced any deal with India, cautions how it was dealt with last season. Strangely enough, cotton exporters entered market to do some marketing when prices and quality suited them.
On Monday the NY cotton futures ended higher on investor short-covering in light trade as players looked ahead to the release of a key government crop report this week. The key December cotton contract on ICE Futures US rose 1.36 cents to end at $1.0334 per lb, trading from $1.0211 to $1.039. The market has traded in a rough band from 98 cents to $1.04 for the last 12 sessions. Volume traded on Monday totalled slightly more than 8,000 lots, over a third under the 30-day norm, preliminary Thomson Reuters data showed.
On Tuesday the NY cotton futures ended fractionally higher in see-saw business, as players adjusted positions ahead of the release of a vital government crop tomorrow. The key December cotton contract on ICE Futures US rose 0.13 cent to end at $1.047 per lb, trading from $1.0269 to $1.04. The market has traded in a rough band from 98 cents to $1.04 for the last 13 sessions. Total volume traded on Monday hit almost 9,400 lots, about a quarter under the 30-day norm, preliminary Thomson Reuters data showed.
On Wednesday the US cotton futures fell almost three percent, as investors liquidated after a government crop report showed supply was larger than earlier predictions, which looked set to keep pressure on prices in coming days. The key December cotton contract on ICE Futures US settled down 2.96 cents at $1.0051 per lb, trading from $1.04 to 99.67 cents. The market has traded in a band between 98 cents and $1.04 for the last 14 sessions. Total volume traded on Wednesday hit over 16,500 lots, about a third above the 30-day norm, preliminary Thomson Reuters data showed. Total volume traded on Tuesday on the cotton market reached 12,216 lots, up versus 7,552 lots last Friday, which was the lowest amount traded since September 16, exchange data showed.
On Thursday the NY cotton futures settled firmer amid talk China might be buying to rebuild stocks, as the market shrugged off a bearish government crop report, weak charts and lower financial markets, analysts said. The key December cotton contract on ICE Futures US rose 1.05 cents to end at $1.0156 per lb, trading from $1.0011 to $1.0248. The market has ranged from about 98 cents to $1.04 in the last 15 sessions. Volume on Thursday was in excess of 11,500 lots, more than 10 percent under the 30-day norm, preliminary Thomson Reuters data showed.
On Friday the US cotton futures ended with small gains on trade buying as the market finished its third week within a trading band with no sign of a breakout next week. The key December cotton contract on ICE Futures US rose 0.38 cent to end at $1.0194 per lb, trading from $1.0108 to $1.0365. The market has traded in a band from 98 cents to $1.04 for three weeks. Total volume traded on Thursday in the cotton market reached 14,489 lots, against the prior tally of 18,352 lots, ICE futures US data showed. For the week, the market is barely changed from its close last week at $1.0198. Total volume on Friday was more than 9,900 lots, about a quarter under the 30-day norm, preliminary Thomson Reuters data showed.
LOCAL TRADING
POLICY RATE WELCOMED BY COTTON TRADERS
On Monday the drastic cut in interest rate by the State Bank of Pakistan was universally hailed by traders and so the cotton traders who expected trading will improve. In ready take off 12000 bales of cotton changed hand in price range of Rs 5600 and Rs 6600. Seed cotton in Sindh gained by Rs 100 to Rs 2400 and Rs 2900, while in Punjab rates stayed put at Rs 2200 and Rs 3100. Noted cotton trader Naseem who is in Faisalabad surveying growth of cotton seemed optimistic about production.
On Tuesday prices on cotton market depicted upturn, against the welcome extended to policy rate. However, spot rate rose by Rs 150 to Rs 6450, phutti in Sindh was quoted at Rs 2400 and Rs 2900, in Punjab the same was registered at Rs 2200 and Rs 3100. It was perhaps in follow up of world trend that local prices too looked up.
On Wednesday the steady phutti supply was expected to pull prices down. The buyers looking prices in favourable limits restrained themselves to see further easing. However spot rate was unchanged at Rs 6450, seed cotton in Sindh stayed firm at Rs 2400 and Rs 2900, while the rate in Punjab was Rs 2200 and Rs 3100. Buying was seen at 16000 bales in price range of Rs 5350 and Rs 6800 per maund and depending on quality.
On Thursday 10,000 bales of cotton changed hands in price range of Rs 6075 and Rs 6600. The spot rate, rising lately was cut by Rs 100 to Rs 6350, seed cotton in Sindh was quoted at Rs 2400 and Rs 2800 and Punjab phutti was quoted at Rs 2300 and Rs 3000. Buying was seen by traders down as consumers expected further easing of prices. The global trend is on occasional down side.
On Friday selling pressure by growers eased prices of phutti on the cotton market but it looked that prices to recover some ground on the back of gains in the NY cotton futures. The Karachi Cotton Association (KCA) official spot rate was continuously being decrease, lowered by another Rs 100 to Rs 6,250. Prices of seedcotton in Sindh were unchanged at Rs 2400-2800 and rates in Punjab were at Rs 2300-3000, In ready dealings trading activity improved as approximately 20,000 bales of cotton changed hands between Rs 5500-6,400.
On Saturday upward trend in the NY cotton futures, haunting the mills to continue cotton purchasing to keep themselves safe from future losses. KCA official spot rate was unchanged at Rs 6,250. Prices of seedcotton in Sindh were unchanged at Rs 2300-2800 and rates in Punjab were at Rs 2400-3000. In ready dealings activity improved as approximately 16,000 bales of cotton changed hands between Rs 5500-6500.
KHARIF CROPS INCLUDING COTTON SEEMS AT RISK
Farmers Association are agitating release of extra water from the reservoirs without the demand of provinces. This they remind is in blatant disregard of the 1960 Indus Water treaty with the connivance of Federal Government.
The council explained that Tarbela and Mangla dams were strictly meant for storing water for agri-sector and not to be compromised for production of electricity, unfortunately though, the fact proves so. God provided us of water according to Sindh Irrigate Dept in throwing all the run of the river Indus water down stream Kotri Barrage into the sea as the riparian province is badly hit by heavy monsoon rains and flood water. Irrigation engineers released 49,000 cusecs water into the Indus Delta, claims it was not needed for sowing or irrigation of crops in Sindh.
Agreed, right at the moment say knowledgeable circles, Sindh may not have been needing water to irrigation but the time is not far when the crops including cotton will be sown and need Irrigation water. It is hoped loadshedding was temporarily given relief by release of Mangla and Tarbela dams was meant for irrigation water, when crops will need water for their irrigation, requirement will be met likewise for irrigation so that crops like cotton, wheat sugarcane do not suffer, unless required care is applied.
FAP PLEA TO RECONSIDER IMPOSITION OF GST
The farmers believe that only agriculture could revive the country's economy, provided GST on the sector is not levied. The Farmers Association of Pakistan (FAP) on behalf of the farmers and agricultural implements manufacturing industry has appealed to the government to reconsider the decision on GST on agri sector. The decision unless taken back, will not hurt only the farmers but adversely hit revenue generation.
The FAP decision came following a special meeting of the association. The meeting was optimistic as it reminded the government of its influence, which it has not used to better the lot of the farmers. Instead the meeting said the increased prices of tractor and agriculture implements would force them to revert to age-old methods of ploughing by bullocks because of unaffordable prices of tractors, high prices of diesel and lubricants will leave them with no other option. Thus FAP demanded withdrawal of GST from all agriculture inputs including tractors and agriculture implements so that the sector gets fresh lease of life to contribute positively to the economy and country.
The farmers registered a number of anomalies like announced and without it, electricity and gas loadshedding besides security and prices always looking up. Some calm seems to have returned in the city and elsewhere but disquiet continues to stare at the faces of poor daily workers.
FIRST WORLD TEXTILE JOINT SUMMIT
The first ITMA-ITMF world textile summit held at Hotel Reg Juan Carlos 1, in Barcelona Spain, brought together textile industry traders and some most influential thinkers, and policy makers in strategically important fields such as economics, trade, technology and sustainability. The importance of summit gained speciality because former UN Secy General Kofi Annan, besides others delivered their rich experience. Top WTO men were also in forefront imparting their experience.
But had they adopted Kofi line, the participants should have gained. The report only touched upon names and their knowledge, had WTO speakers given out the pangs the people who have been denied the share of a good living. In likewise manner, textile machinery manufacturers were referred without questioning why Pakistan in nearly 70 years have simply bothered to produce raw and semi-raw materials. The ill effects of this carelessness were that firstly, our own value-added manufacturers had difficulty in competing with those who were supplied our yarn. The billions are drained out on imports of old textile machinery and indeed, over imports of chemicals and dyes.
Nobody questions how much textile exports earn and how much is simply wasted on imports of machinery which changes with the fashion and likes of the those who are ultimate gainers. Report incorporates every one with slight link with textile businesses who much have drummed out to reach those who are still struggling and needed expertise to walk shoulder to shoulder with people who are recognised as successful.
LOADSHEDDING DESTROYING EXPORT INDUSTRY
The above informed headline of one report, and at negligible distance read another more awful headline industrialists may not be able to pay electricity bill. How the two headlines sound? Lack of governance, no. Pakistan is not land locked, entirely snow covered country. Those who confronted two opposite powers to prove that Pakistan is a country, which had come to stay.
No doubt, in east and west both sides were truncated in such measured way to have given best rice producing areas in east to favoured India and cotton and wheat, sugarcane producing areas in the West. These areas even today exist and Almighty still takes care but Pakistan continued and will continue to be deprived at agri products. Despite the regrettable loss all agree God has rewarded enough to remaining Pakistan. Our neighbours in the east and west cannot stand cotton, rice, wheat, sugar etc are always taking advantage of duty free imports.
The industrialists have threatened to stop bills in very much similar tone and tenor, farmers have also expressed similar feelings. How to share the feelings of those who in shivering tone asking authorities to come forward before it is too late. How much authorities have absorbed the politely awarded warning, will be reflected in positive action they hurriedly take rather than Pepco simply asked to present loadshedding schedule.