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Trading stride observed on cotton market
KARACHI (April 19
2004): Trading stride was observed towards the end
of the week when buyers sensing world rate
appeared in bullish mood turned to local markets
to avoid as much loss as possible.
The pressure meanwhile mounted from the buyers
side led to three pruning in spot rate seen on
Friday at Rs 2800 without 15 percent ST and Rs 50
upcountry expenses.
WORLD SCENARIO:
Turbulent week in international cotton seen ebb
reaching so called limit high and low ended
sharply higher after a long wait for such a
development.
The week, May opened at 58.76 and closed at 61.99
and July opened at 60.69 closed at 62.36 cents a
pound.
The Monday's trading in New York witnessed 8-month
low on speculative and option-related sales, with
weakened rain in large swathes of US cotton belt
contributing to the sell-off.
Traders said that inability of the market to
respond to bullish USDA export sales report at the
end of the week speculators jittery.
Analysts said market players will now be waiting
for weekly USDA crop condition report.
On Tuesday the same condition persisted leading to
fresh 8-month low with more volatility seen in
fibre contracts ahead of options expiration.
The third and fourth day's trading soared on
steady speculative fund buying and the positive
mood established by the weekly USDA export sales
report.
Analysts said most of the speculative buying, was
also aimed at tweaking positions in front of
Friday's option expiration.
The last trading closed mixed on switch trade and
options related dealings tied to options
expiration to cap a week of volatile price swings.
Cotton dropped to an eight-month low on Monday,
and then surged up its 3 cent limit following day.
Problems in China, Central Asia or the US would
have the most impact on New York futures expert
said in a report chartist peg support for the May
cotton at 61.20 and 60.60 with resistance at 62
and 62.60 cents.
LOCAL TRADING:
Pressure never ceased on ginners to accept world
trend and reduce prices.
The ginners were wise to slash the spot rate on
the very first trading day on Monday. But that
seems to have not satisfied the spinners.
The trend began on Monday was not sustained.
Ginners continued to be provoked to bring down
prices however.
The week ended with at least three cuts in
official rate to Rs 2800 until Friday.
On Monday, trading appeared good, around 6000
bales, for gainers showing that were prepared for
cut if trading yielded outlet.
The second day trading turned low as only two
fresh deals were reported. The official spot rate
was give a day's rest to stay at Rs 2850.
In New York sharp fall was hurting the May and
July contracts. On Wednesday, no fresh deals were
furnished but lately lauded deals from DMR were
lifted. The two deals were priced at Rs 2600.
The slow movement of trading was not only factor
behind spinners attitude but overall shape of the
textile sector was stated to be also behind it.
The spot rate was by Rs 25 to Rs 2825, might to
due to dampening effect in New York. The fall was
reported second day in a row.
The spinners have come down to calculated deals
meaning that they are not fully happy with Rs 2825
hence the ginners took a step farther and cut
another Rs 25 to Rs 2800 to mark the climax.
However, deals were not in level that could be
said to be desirable. The threat hover came from
New York where prices took to limit high.
The result was well exposed on Friday when
increased pace was seen in buying, obvious result
of signals from New York that prices were not to
look back until the week-end. Nearly 5000 bales
changed hands.
SATURDAY'S:
Nearly 3000 bales of cotton changed hands on the
weekend while spot rate was not revised. The
buying support was attributed to rising prices in
world rates.
TEXTILE MINISTRY:
The call has been now dormant for sometime as
reason is not always acceptable to the
authorities.
This column however reminded about the body every
now and then. Thank God need for a textile
ministry has been dawned and Prime Minister Jamali
is said to be seized of the issue and the same may
be take a shape. Prime Minister has gone a step
ahead from the simple call of a textile ministry.
He wants Punjab province should have a provincial
level ministry. When these are going to take shape
and start operation is somewhat hazy at the
moment. But PM could be taken on face value.
Meanwhile proponents, leaders of the textile
sector have started hailing the move. The Aptma
chairman has taken sometime before making a
comment on textile ministry has gone beyond that
and have suggested that why Punjab and not Sindh
too have one textile ministry. It is expected that
the ideas about the federal ministry for textile
sector and provinces of Sindh and Punjab will have
their own ministries to monitor the work right
from the day first seed of cotton crop is sown and
textile exports stage.
At the moment any problem arises, leaves players
confused and upset. How to get solution solved. So
far commerce ministry and often finance ministry
have played their role but do they not have their
own vast field to tackle problems.
In the regard why leave. Balochistan without any
caring nurse for it. It has been growing over one
lakh bales absolutely contamination free cotton.
At least a nursing home could be set apart to
foster it to a blooming cotton producing and
textile exporting province.
DISHONOURED CONTRACTS:
The country was fighting its worries caused by the
European Union 13.1 percent anti-dumping duty on
Pak bed linen. Offer of review could be consoling
but it does not guarantee whether outcome will
definitely be in favour Pak bed-linen exporters.
Now yet another disturbing news in staring into
yarn exporters' eyes that unspecified quantity of
yarn has been simply refused to be honoured
because in the meantime yarn prices have
registered a sudden fall.
However much of the apprehension is premature, in
the sense Pak exporters have taken alarm from what
Indian had to face.
Sources who were quite well versed with the
problem argued that unless exporters are informed
the fear is nothing but whimsicality. Here in the
report primary factor why contract was dishonoured
was higher price.
These sources informed merely price factor is not
as serious to yield nothing if talked and
convinced the importers that such fluctuation is
beyond their control.
What however, is to be genuinely concerned about
is also experience of deficient cotton quality,
short supply and poor implementation of contracts
etc. The suppliers should be very careful once the
confidence is shaken, is difficult hold back.
TAIL PIECE:
The concern of the authorities to increase the
production of cotton is understandable. The
consumers today claim the consumption has
increased from somewhere 90 lakh bales to around
one crore 20 lakh bales. But how is not being
given thorough exercise to make the pious wish a
reality.
A recent report speaks about additional 0.6
million bales has been fixed over above the target
of 2.4 million bales in Sindh. But the same story
gives the constraints such as 10 percent water
shortage in provincial irrigation network.
According to Irsa the shortage is to linger for
ten more days. This fact will have negative impact
on cotton sowing particularly in Tharparkar and
Sanghar. Besides water good variety seed, pure
pesticides and its proper use etc pre-requisite.
One can hope all the necessary inputs are made
available to realise the dream of higher yield in
Sindh.
Courtesy Business Recorder
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Pakissan.com; Advisory Point
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