KARACHI (March 22 2004): Pulling down prices early in last week generated some good buying prompting ginners to reassess the situation owing to world rates moving on the reverse course, relevant sources said commenting on the week's trading which ended on March 20, 2004.

The spot rate, showing also the trend in ready, fluctuated both ways before settling at Rs 2975 without ST and upcountry expenses.

WORLD SCENARIO:
The bullish trend was evident in New York cotton trading, right from the beginning of the week, owing to persistent speculative buying. May opened at 65.43 cents and July at 66.72 cents a pound and closed at 67.97 cents and 69.12 cents a pound, respectively.

Monday session saw reverse trend in futures on speculative buying, with the market poised to claw higher on follow-through purchases.

Fundamentally the demand side in the market looked rosier, specially the USDA raised forecast of Chinese cotton imports to 8.5 million bales (480 lbs) basis 2003-04 from just 7 million bales.

Speculative buying continued on Tuesday. Dealers said speculative accounts were trying to push the spot May contract past key resistance around 65.90/66.30 cents, but fettered each time.

On Wednesday the trend continued, giving the fibre contracts a boost, as analysts believed the market was inching up ahead.

Brokers said US net Upland cotton sales were likely in range of 200,000 and 400,000, meaning higher than previous week, mainly because of slide to an 11-week low earlier in the month.

The USDA data was expected to this effect shortly. This was second time the futures closed mixed in New York with near months buoyed by spec buying, but most players kept to the sidelines to see if more cotton export business was done over the week-end.

Meanwhile USDA weekly export sales data showed net Upland cotton sales hitting 495,000 RBs, much above traders' belief.

Shipments stood at 320,200 RBs, slightly better than the 316,400 seen previous week. Now the market was to turn its attention to USDA's planting intentions due at the end of March.

LOCAL TRADING:
The prices had stooped so low as to suit the exporters' parity. Resultantly it led to first burst of trading--in weeks. The official spot rate, hiking to Rs 3000, was seen as indicator to rates in ready.

The cotton had been changing hand around Rs 2750 and Rs 3100. The spinners were waiting to see whether ginners were to show tendency of tiredness. And, at sticking, for a day or two at Rs 3000, proved enough was enough.

They lifted around 10,000 bales on the opening day. But ginners, keeping power in hand for the ready, slashed another Rs 50 from the spot rate to lure spinners to return in bulk for buying.

Nearly 6000 bales of cotton changed hand at prices ranging between Rs 2350 and Rs 3100, depending on quality.

In the third session, spinners resorted to calculated buying so that while they lifted cotton, ginners were restrained from lifting the rate.

Spinners had, and rightly so, an eye on the world trend which was keeping bullish. Nearly 7000 bales of cotton changed hand at Rs 2900 to Rs 3000.

On Friday, the spinners exposed their need clearly enough by lifting around 12000 bales at prices ranging between Rs 2750 and Rs 3100.

Experts, commenting on the recent modest spate of buying, said that buying was likely to sustain, keeping a keen eye on the availability and prices trend. Fresh planning was easier now, they said.

Then India-Pakistan cricket match intervened on Friday to take away the outflow of cotton pace as brokers reported that the match, and Friday, caused little trading, statistics of which was not possible to ascertain from any quarters.

On Saturday, trading in cotton was maintained at a level that manifested spinners' resolve to keep the ginners from quick raise in cotton prices. Spinners had been force to apprehend as cotton futures in world markets had been showing bullish tinge.

Meanwhile, over 8000 bales of mainly Upper Sindh lint were offered and bought at prices ranging between Rs 2650 and Rs 2950. Spot rate proved sticky as it was unchanged at Rs 2975.

In view of the B quality yarn rising trend in cotton and cheap yarn, consumers were demanding that B quality yarn was being sought claiming that it will be 30 percent less than A category. But while the proposes were keen this suggestion to give it a concrete shape did not specify why it will sell like hot cakes.

The WTO regime, even if it sets in, the caller thinks its value will not be less. Khurshid Shaikh, Chairman, Pakistan Yarn Merchants Association (PYMA) was also emphatic on the point of a number of jobs creation for unskilled workers. These boys, roaming aimlessly, will be usefully employed to weave cloth with the help of imported B quality yarn on slow machines.

To facilitate cheaper cloth he urged CBR to allow exemption from payment of three percent additional ST on filament yarns to the unregistered persons. He reminded the CBR had already agreed to exempt tax on sale of spun yarn.

He said high speed weaving and knitting machines consume high quality yarn. But machines consuming 'B' category imported yarns are understandably available which sit idle. It was, therefore, suggested to stock lot yarn which often has quality yarn as over-run production.

The scheme appears quite paying as Shaikh claimed yarn merchants were ready to pay full customs duty rate charged on imports of 'A' quality yarn.

However, what has to be kept always in mind is that cheap products are vulnerable to penalties like dumping duty etc. Anyway, authorities are quite competent to examine the usefulness, after discussing the matter with yarn merchants.

TEXTILE CITY:
A textile city in Pakistan was being planned, according to reports a few weeks back, to boost textile activity in the country on the advent of WTO regime in a few month's time.

For some time, quiet prevails on this front. One hopes it is in the process.

Similarity in name draws ones attention to the one being planned in Dubai. The Dubai project was launched on March 15, 2004, by a local textile merchants group, Texmass.

This mega project will cost $60 million and will be spread over 557,000 sq metres of Emirates' As-Warson area. The area size speaks enough how ambitions it would be.

The project will not move in a snail's pace but sponsors hope it will be ready by mid-2005, a time when WTO regime would have come in full swing. The Texmass groups 300 local and international textile merchants (one hopes Pakistan is there) in Dubai.

The land has already been allotted to 90 investors. The second phase is ready and is being booked, a report said. It is hoped that Pakistanis with so much experience should be participants. But it would have something great if such a project would have been their creation.

However, at what stage Pakistan's textile city is, is not known with clearly. Doubt emerges from the fact that there were whispers that a separate textile city would hurt the industry. And now, the Dubai textile city?

TAIL PIECE:
The spinners are in a pretty fix because they were quite slow as prices dipped in last few days.

The world rates, ruling above Rs 3500 and around, Pak cotton offers prospective chance to go for quick lifting. But ginners, who wait for such occasion that spinners have no way out, raise prices.

Even in the last week after except initially pulling Rs 25 down maintained throughout Rs 2975 for taking a definite decision on Monday.

Courtesy Business Recorder