Excessive phutti arrivals drag down spot rate, lint prices in ready deals; transport problem affects business volume

As the trading came to a close on cotton market buying volume continued to jump, except the last two days, not bothering how costly were the transportation means. This aggressiveness was never seen in previous years. Higher phutti arrivals impacted the prices. KCA official spot rate was reduce by Rs 300 to Rs 5,450. In ready dealings prices went down from last week's Rs 5,400-6,100 to Rs 4,300-5,450
WORLD SCENARIO
The cotton futures continued to shed value though interrupted by rises, too. Besides, other untoward sour fact Euro-zone austerity moves, Global uncertain goings. Investors are too apprehensive. China has been ordering imports but not liberally. Greece's austerity package dragged commodities to dip including cotton. Last week were sales at 96 cents. Weekly sales during last week of October showed encouraging volume - 164,904 lots.
Indian cotton team - NITMA has been welcome in Pakistan. It is in hand plan to sign MoU encouraged by likely MFN status. In over six decades this seems to be most positive development. Pakistan is always in need of world standard cotton preferable to acquire from India. Eternal friendship is cherished but roadblocks appear. One hopes and prays relation stay lasting.
Very recently India quietly refused to deliver nearly one million bales of cotton despite signed accord. Pakistan had to look for cotton elsewhere on higher terms. China has largely based on local cotton for avoiding alternatives. Imports have been still higher by 98 cents a pound. However, if inflation does not come in the way, Brazil is in view with much favourable offers.
On Monday the US cotton futures closed lower on month-end liquidation and profit taking, as the market eased for the first time in seven sessions and may consolidate after its recent surge. The key December cotton contract on ICE Futures US dropped 2.08 cents or almost two percent to finish at $1.0229 per lb, moving from $1.0114 to $1.0464. On Friday, the contract ended at $1.0437 in the highest settlement close for spot cotton in six weeks. For the month, the spot cotton market was up 2.1 percent. Total volume traded on Monday hit over 13,200 lots, about 10 below the 30-day norm, preliminary Thomson Reuters data showed.
On Tuesday the NY cotton futures closed lower on liquidation by investors spooked by a re-emerging euro zone debt crisis and news from US brokerage MF Global. The key December cotton contract on ICE Futures US dropped 2.75 cents or almost 2.7 percent to finish at 99.54 cents per lb, moving from 98.77 cents to $1.0275. Total volume traded on Tuesday rose over 31,700 lots, on track for the highest since June 10 and more than double the 30-day norm, preliminary Thomson Reuters data and ICE Futures US data showed. On Friday the contract ended at $1.0437 in the highest settlement for spot cotton in six weeks mainly due to optimism the European debt crisis had been resolved.
On Wednesday the NY Cotton futures ended lower on speculative sales, as worries over the protracted euro zone debt crisis kept investors on the defensive. The key December cotton contract on ICE Futures US dropped 1.20 cents or 1.2 percent to conclude at 98.34 cents per lb, moving from 98 cents to $1.007. Total volume traded on Tuesday hit over 20,000 lots, over one-third above the 30-day norm, preliminary Thomson Reuters data and ICE Futures US data showed.
On Thursday the NY cotton futures ended easier on investor sales although the market traded in a band as players waited for leads, while keeping an eye on the protracted euro zone debt crisis. The key December cotton contract on ICE Futures US slipped 0.22 cent to finish at 98.12 cents per lb, moving from 97.30 to 99.44 cents. Total volume traded on Thursday hit over 20,700 lots, over one-third above the 30-day norm, preliminary Thomson Reuters data and ICE Futures US data showed.
On Friday the US cotton futures finished with moderate gains, as investors covered short positions heading into the weekend amid ideas Greece will reach a deal on its debt crisis and MF Global customer accounts will be transferred to add liquidity to cotton trades. "All week cotton ended lower, but on the last working day it finished stronger, because some guys wanted to take their profits going into the weekend," said Ron Lawson, managing director of logicadvisors.com. The key December cotton contract on ICE Futures US rose 0.62 cent to end at 98.54 cents per lb, after trading between 99.82 and 98.05 cents. Total estimated volume on Friday was 20,721 lots, one-third higher than the 30-day norm, preliminary Thomson Reuters data and ICE Futures US data showed.
LOCAL TRADING
Despite odds and hurdles by non-availability of trucks, mills continue to indulge in shopping on favourable terms. The spot rate remained unchanged at Rs 5750, while buyers laid hands on 20,000 bales between Rs 4500 and Rs 5800. The seed cotton ruled in Sindh lower by Rs 200 to Rs 100 to Rs 2000 and Rs 2600, while similar loss was marked at Rs 2200 and Rs 2700. Those who had their own transportation means laid hands on available lots.
On Tuesday volume of business further rose by forward buying by spinners continued. The transportation problem apart, over 20000 bales of cotton were bought around Rs 4200 and Rs 5700. The seedcotton in Sindh and Punjab held to previous level. KCA slashed spot rate by Rs 200 to Rs 5,500. The expeditious seedcotton supplies and falling prices prompted those who owned or could manage truck to buy cotton to heart's content.
On Wednesday massive buying was seen for third consecutive days. Market sources said transport problem was no problem. Thus 23,000 bales of cotton changed hands between Rs 4000 and Rs 5500. KCA further reduced spot rate by Rs 100 to Rs 5,400. The pre-holiday buying was in the past always shy, same trend was reversed this year. The spinners and textile exporters are exposing them to record exports, perhaps.
On Thursday report said phutti arrival showed increase, the buying and selling activity nearly vanished ahead of Eid-ul-Azha - the usual transportation problem. Spot rate was unchanged, phutti in Sindh was selling at Rs 2000, while fine type yielded Rs 100 to Rs 2400, rates in Punjab were at Rs 2200 and Rs 2600. In ready off take setback in buying was seen at 15000 bales in prices between Rs 3800 and Rs 5600.
On Friday holiday mood prevailed on the cotton market, as both buyers and sellers were on the sidelines due to scarcity of transport. KCA official spot rate was unchanged at Rs 5,450. Prices of seedcotton of low type in Sindh were unchanged at Rs 2000-2400 and rates in Punjab were inert at Rs 2200-2600. In ready dealings over 2000 bales of cotton changed hands between Rs 5,300-5,500
On Saturday slow business was again witnessed ahead of long weekend due to Eid-ul-Azha holidays. KCA official spot rate was left unchanged at Rs 5,450. Prices of seedcotton of low type in Sindh were unchanged at Rs 2000-2400 and rates in Punjab were inert at Rs 2200-2600. In ready dealings about 1500 bales of cotton changed hands between Rs 4,300-5,450.
LOGGERHEADS OVER COTTON OUTPUT ESTIMATE
Twenty-four hours before cotton body released proceeds of its meeting giving cotton out put figure at 12.22 million bales, against earlier target around 15 million bales. The figure was backed by increased acreage and on perception that consumers needed 16 million and more cotton to improve exports. Sorry indeed, the floods ravaged said to be around 30pc of the crop. Under the even it was required to tell the consumers and interested quarters expected output. But interest, which considered figure either higher or lower jumped to spot right - in this case, was PCGA.
For decades interested quarters disputed figures offered by the other. Until textile ministry was given shape, textile sector had to depend, turn by turn, on finance and commerce ministries. It was rightly harboured that textile ministry would set things right. The credit does go to ministry for 2011 maximum textile export owing to least disputes.
When cotton committee announced it was in the in the presence of nearly all stakeholders. But some hours afterwards PCGA explained thus: cotton crop assessment at 12.22m bales is based on international standard weight of bales ie 170-kg, while the bales being produced in our country are approximately of 150-kg. If the latter weight is taken into consideration the estimate rises to 13.852 million bales. Any way some cure has to be found to end recurring heart burning without keeping in view the ill effect on the limping economy.
COTTON PRODUCTION AT 12.22 M BALES ASSESSED
The CCAC meeting should be held as frequently as possible with production figure, as close to projected yield. The crop committee should try to be as close to yield other interest desists from disputing the same, which is not infrequent. Another features appreciable carried by the report are that hardly any stakeholders have been left out, giving credence to the proceeds of the meeting.
The meeting highlighted KP, which is emerging as cotton growing area. The meeting learnt a substantial increase in cotton cultivated area in D.I. Khan and Tank. The participant noted that more area should be reserved for growing cotton, which produce naturally dirt free cotton.
Keeping in view natural clean more and more land should be reserved as textile ministry is aggressively planning more or around 15-16 million bales so that minimum import is registered. This season 15-16 million bales were fixed as target, but heavy rains and light CCLV attack brought production estimate around 12 million bales or like size. Good news about some canals being set aright for the purpose of feeding starving crops mainly rice, wheat, sugarcane and cotton. Alas! The move should have been necessitated considering urgency and decades back rather to day when as an only way out.
INDIAN TEAM ARRIVES TO TALK WITH APTMA
Few months back one could not even imagine Indian cotton team will be holding talks and signing MoU. The APTMA, which is in focus called it a great day for Textile Industry. The leader was loud in telling that his organisation had taken initiative of inviting NITMA ahead of finalisation of MFN status to India.
The stress would surprise many who go through statements opposing MFN status to India any time soon. Present on the occasion textile minister said Pakistan wholeheartedly welcome whatever role their two organisations like to play. However, he reminded that both sides would have to remove certain road-blocks in continuing bilateral trade to achieve mutual benefits. Both sides will pin down irritants and ensure free market policy.
The atmosphere during the talks was aromatic to the brim. Occasions like this has hipped drop during the decades interrupted by quite deadly wars. In recent months following cricket matches, PM met with Manmohan Singh and then talks with Secretary level officials, commerce ministers. Some such give and take has lately been in practice manifested the two neighbours have realised why relationships be promoted of the good of two next door neighbours.
TEX POLICY UNLIKELY TO BE IMPLEMENTED
Any policy or project, if given a meaningful shape, more so in public sector, leaves traces of doubt. The above headline, at a glance relaxes common readers who precipitate forward in relief. One has to give another look if any policy or project showed off positive inking. The governments and the succeeding rulers since emergence of this state expect the outgoing rulers should have taken pains to build and develop to rest in palaces and be content. The ECC and relevant institution give green signal for the most urgent projects to be dropped for shortage of fund.
The gas and power liquidity, which stopped industrial production emerged in such vigour that nearly shook the limping moving government. The PM and the President found meeting point dropping some vital projects to hurriedly imburse fund for about half a dozen small and medium size dams. The show of strength through men with no job or two square meals will be judged from parties who are voted to power. Wait, however, be patient for year 2014 when textile policy will mature.