KARACHI (January 12 2004): There was no major setback in US cotton production affected futures which passed on the dampening impact on cotton prices in Pakistan during the week ended January 10, 2004, when spinners laid hands on every bale on offer, relevant sources said.

The official rate began at Rs 3325 and closed Rs 50 higher at Rs 3275; without ST and upcountry expenses.

WORLD SCENARIO: Slightly uppish trend in dollar very lately is keeping foreign cotton buyers guessing, pressurising the cotton futures to take a dip.

The opening session in New York Cotton Exchange saw cotton futures settled firmer for the second time, dominated by speculative fund buying.

The speculative players, who drove things up at the end of 2003, have come back in the new year and were good buyers.

On Tuesday, rally fizzled out to give way to losses - after a bullish outlook from a major industry player failed to continue the rally in prices.

However, players are banking mainly on China, which has recently announced its import quota 2004 at 894,000 tonnes or 4.1 million bales.

China's imports have been shown at 7 million bales. China's imports settled lower on Wednesday pressured by technical selling after the recent rise in fibre price.

The cotton market had basically a six cents rally at the end of 2003 and a correction today is probably normal and healthy, knowledgeable circles commented.

Traders said we had export sale data out only a short while ago, so there may have been a little profit-taking ahead of those (export sale) numbers.

The shipments were blocked as experts said shippers want to ship but they are having trouble getting space on container ships because of so much else was there to ship.

On Thursday futures settled higher on speculative buying with operators looking for USDA monthly supply report.

However, leading traders were expecting US crop between 18.3 to 18.5 million (480 lbs) bales.

The closing session on Friday featured some light profit taking. Traders said they were definitely technically bullish, in sentiment we are bullish and the fundamentals are bullish. But there were others who had reservations.

LOCAL TRADING: The week saw quite good bit of trading, in which the point to be considered is that quality lots are getting exhausted and spinners are not happy about prices which are keeping high.

However, a pull downward in the middle of the week, as a consequence of falling futures in New York, saw a slight interruption in buying support.

The spinners usually tarry and watch the trend before they start buying. The case was not any different this time.

Buying almost burst, which is very difficult to guess if all deals were fresh or stale.

The first day's trading was slightly low as prices firmed. Nearly 3000 bales of cotton was traded as spot rate beamed at Rs 3325 without ST and upcountry market.

The offer was both from Sindh and Punjab. Prices ranged between Rs 3050 and Rs 3350. The sources were not ready to say where market was headed to.

Utmost they said was that quality lots are being looked for. Some Indian cotton is in the pipeline.

Recently Brazil, which said after years it was able to have some surplus, would like to sell at 35 cents a pound - half the price US traders are selling at. As to the numbers of bales traded and at what price, instant comment is very difficult to say due to mixed up reports of old and fresh deals struck.

It is only sellers who know what's the problem. They said prices from markets land very late after the Karachi exchange closes.

However 16000 bales were lifted from DMR and taken for granted that they were sold on opening day.

The prices were between Rs 2950 and Rs 3350. Another day of hectic activity was reported on Wednesday.

The natural consequence was prices were pushed by Rs 50 to Rs 3300. Around 23500 bales were furnished as having been sold on the day.

The news was important that breakthrough in talks between India and Pakistan had seen some orders booked for import of 150,000 bales from India, 10,000 reported as having already reached the consumers inventory.

As prices were on the downward track in the world, the ginners relaxed prices by Rs 25 to Rs 3275. But buying turned slow obviously to see the market trend. 8000 bales were traded at prices between Rs 2950 and Rs 3350, depending on quality.

The trading had slow going on Friday. Nearly 4000 bales changed hands at prices between Rs 2950 and Rs 3350.

However, the direction-less trading in Pakistan was to a great extent result of such a trend in world trading.

Saturday's: Cotton market depicted steadiness as a few deals were struck as usual after office hours.

CONFUSED, STILL: Will various interests ever come near a realistic level of cotton estimate for economy and country's sake?

The authorities dealing with cotton and textile need-vested to be reminded not to follow the dictates of interests, but hold on to the figures provided by growers and agriculture staff, sources close to cotton and trade said.

They were asked to comment on the stories from Karachi and Islamabad about cotton production.

The story from Karachi was obviously meant to support official estimate at 10 million bales, downgraded for the third time.

The estimate is strongly contested by the ginners whose gain is in keeping as low an estimate for production as possible to keep the cotton price bull driven.

Ginners have often come in the open alleging official body estimates are not true, and are given a higher number to please a particular consumer.

The US interests differ from USDA monthly and weekly estimates. But US Agri Department figures are not disputed after they are released.

Why, is the question that invites attention of the authorities in Pakistan!

Such contests continue ever since season's first crop estimate came in the press.

The other day a report, without giving a specific figure, said that extra sowing was reported of cotton crop because of its higher price levels.

It was given to understand that wheat had been forecast to be imported, because local production of what would suffer, s cotton growers have utilised more land for growing cotton, ignoring wheat.

The real picture will, probably, never come in public view. Utmost, the officials would do is to say something in defence of their claim.

This the government is doing apparently for the good of the country.

There are certain things which are causing strain on the exchequer and need to be tackled as early as possible, such s cotton production estimate, and duty draw-back issues which leads to no good for the economy or the country.

CONTAMINATION: " Contamination is one of the biggest hurdles (faced) by spinners and down stream processors," the US National Cotton Council (NCC) official said adding buyers of shirts and textiles are increasingly demanding that finished goods be free of contamination.

The above was expressed by Andrew Jordan, technical services department head of the NCC in a report to the annual Beltwide Cotton Conference recently.

He said that lint contamination is a problem affecting textile mills around the country which has cost several hundred million dollars in damage.

The problem is well-known in Pakistan where human hair, chocolate packing, trash from the jute bags cause contamination.

Of late this problem has been taken up by the authorities in Pakistan very seriously.

But no one can say a contamination free culture has been created in cotton here. According to Jordan worst affected are spinners and textile manufactures, but in Pakistan, according to ginners, their bid to supply cotton without trash was refused disdainfully because no one was prepared to share the extra cost borne by the ginners.

It was given to understand that fixed ginneries in Sindh and Punjab would produce dirt free cotton and TCP will patronise the same for exports purposes. But so far TCP has not contracted even a single bale from ginners. Nor has any report been seen anywhere saying dirt-free cotton has attracted buyers.

However, buying pace that is seen today, and spinners not objecting to high prices when prices rule high, is a message that spinners have quietly been lifting cotton of all sorts.

However, the Beltwide Cotton Conference is an annual feature where particularly cotton growers, and cotton consumers congregate with much fanfare to decide on issues confronting them.

But this year this particular issue was highlighted sending a warning to suppliers of contaminated cotton to be cautious.

Thank God the subject has remained in limelight in Pakistan for a couple of years and the cotton suppliers will take heed, it is hoped.

TAIL PIECE: Pakistan remains embedded to fight global terrorism and risks security and stability. But partners appear to withdraw favours on various counts, one such thing being anti-dumping duty threat every now and then.

Unfortunately countries who have not joined fight against terrorism and stayed firm and invited terrorists to target them, had considerably influenced EU to take back GSP facility.

The EU had reluctantly extended this facility with condition attached to it that labour laws and laws regulating environment should be adhered to.

But shipment was yet to begin when withdrawal of the facility was announced from January 5, 2004.

The sufferers have approached proper quarters and it can be hoped things are thrashed out and a big loss is salvaged thus.

Courtesy Business Recorder