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Increased cotton buying, rising
prices welcome WTO
SHAFI AHMAD SYED
KARACHI: Increased cotton buying and rising prices welcomed
WTO just set in to regulate trade order, said relevant
sources commenting on the business during the week ended on
January 1, 2005. The total surge in the official spot rate
was from Rs 85 to Rs 1925 without upcountry expenses.
WORLD SCENARIO: The New Year celebrations and long
holidays hovered the week keeping cotton business lethargic,
and futures firm. However, on Monday, when trading resumed
after Xmas holidays, futures was marginally higher on trade
buying in lethargic business, with brokers saying market
would likely stay in band.
The markets closed on Thursday for New Year's celebrations
will open on Monday, next. On Tuesday futures maintained
firmness on end-of-the year speculative short covering and
trade buying and follow through purchases may push the
market higher before the week and year is out.
Traders said that was end-of-the-year buying, and added the
failure of the market to push past its recent lows promoted
speculative accounts to cover their positions.
The analysts are looking closely whether consumer buying of
cotton would be enough to absorb the record crops. Dealers
said once players completed their year-end-positioning in
cotton, the market could turn quiet ahead of the New Year.
The futures settled softer on Wednesday on trade sales but
those losses were pruned by a tout of fund buying, with
brokers saying the market seemed poised to grind higher into
2005. Trade sales deflated fibre contracts, but fund buying
stopped the fall and led the market back. Analysts added
most players are reluctant to press the market hard going
into the New Year holidays and that most of the activity
involved players tweaking their position going into 2005.
The last day of the week trading marked cotton futures
settled at a one-month high on speculative short covering
from players in the year's last trading day with follow
through purchases seen boosting the market.
Traders said the market might have also derived some
inspiration from higher-than expected US cotton sales in the
USDA weekly export sales report. The total sales reached
268,400 RBs 500 Lbs each.
The US cotton shipment reached of 177,500 RBs. The March
opened at 42.92 and closed at 44.77 cents a pound end May
opened at 43.40 and closed at 45.19 cents opened.
LOCAL TRADING: The fact that global trading system
WTO is already here, the cotton trading saw much improvement
and prices also rising in repaid stride. Spot rate last week
rose from opening at Rs 1840 to Rs 1925 on Friday. The
realisation that competition that will generate due to quota
free exports will increase demand, cotton buying was marked
higher.
The consumer/exporters all looked for good/quality cotton
for quality products and at cheaper rate thronged market to
lift every choice lot. Another factor was consideration of
the ECC to show green signal to the TCP to enhance cotton
exports.
However, the trend was evident from the right day one
observing that seed-cotton prices short up on Monday. Phutti
prices in Sindh ranged between Rs 700/875 and in Punjab Rs
750/Rs 890. Nearly 16000 bales of cotton changed hands in
the price range of Rs 1900 and Rs 1950.
Spot rate opened at Rs 1840. On Tuesday, trading subdued
slightly but buying support continued significantly up. The
TCP asked to halt for a whole was asked to continue.
This helped sellers to push spot rate by Rs 20 to Rs 1850.
Meanwhile, exporters hold their nerves and prepared to
embrace the enhanced trading pattern of textile products.
They were hopeful; orders for imports from big countries
will supply double or treble.
The next day spot rate bulged by another Rs 30 to Rs 1890,
but buying support maintained on the way. Exporters, who had
made some investment in improving the skill of worker and
mills equipment and technology etc, were on the market to
left every quality cotton lot so that they are not
exhausted. Over 1600 bales of cotton changed hands.
On Thursday, buying had accelerated signalling that
exporters were bracing for tests that new global trading
system was bringing in its wake. Spot rate to be quoted at
Rs 1910. Phutti prices were marked at Rs 750/925. On Friday,
spot rate showed another rise of Rs 15 to Rs 1925.
Phutti in Sindh ruled at Rs 725 and Rs 925 while in Punjab
prices ranged between Rs 725 and Rs 935. In Sindh, cotton
ruled between Rs 1650 and Rs 2000 while in payable they were
in the range of Rs 1700 and Rs 1950. Heavy rains in payable
restricted normal sales/purchases.
The official spot rate was unchanged on Saturday at Rs 1925.
TEXTILE POLICY: The one para news could have been by
passed without requisite notice attached to it. But the
headline was catchy and relation with the subject was so
close, going through its content was a must.
It was a small announcement regarding textile policy -
important in its own right. It was specifically mentioned,
as the first textile policy ever and was to be announced
some day in February 2005, by happily the first ever textile
minister. Both are heartily welcomed with prayers on lips
they prone auspicious.
When struggle was on for putting in lace textile
ministry/minister by way of reference names were printed who
was a hurdle in the way of textile ministry. But, it needs
mention, India and Bangladesh already have ministry while in
Pakistan, such big sector cotton and textile was generally
run by commerce ministry and had finance ministry blessings,
where financial matters were concerned. And just to refer a
few stories, which doubted textile industry with, already
announced minister had "come to stay".
But should one thank WTO or the currently run govt that
after half-a-century textile ministry was considered
necessary. If, in February, textile minister announces the
first ever formation of textile ministry, not only doubts
about textile ministry but also many other problem will look
easy to thrash out. Although WTO system, people say, has
saved textile exporters from bigger, then the investment
exporters claim to have made, because products with low cost
and quality will get easy access in countries, yet design
and attractive look will have to be given to cheap and
quality export products.
Now, as this column will be printed, all about China, India
and of course Pakistan is being written and said will
crystallise.
MADE IN CHINA: "Our costs are low, while quality and
variety reach the average global standards", textile expert
Chen Yifang proudly gone out to a world news agency. This is
simple and touch but most textile exporters in many
countries look aghast what after just few hours hence to our
exports.
Most of the exporters have condemned second third hand
machinery, lad and haggard technology, unskilled labour for
monetary reason and whatever manufacture and exports nations
exchange are favour exchange, starved governments can make.
The Pak exporters have been impressing govt that they can
increase exports but put terms and conditions such as raw
material availability be ensured by the govt. It is claimed
that their capacity to manufacture and export products much
more, if cotton production was more than 13 million bales.
The cotton quarters have the capacity to meet local needs
but who will come to help if "bumper" crop is necessarily
meant to pay low. China is a country like any country. Even
cotton production may be large but cannot match the amount
China could produce textile products and exports.
Even the most technologically advance countries in the West
are upset how to beat or match China. Textile exporters were
breathing normally until that country was included into the
firmly of "WTO", in 2001. It will be spectacle to want and
see what preparation Americans and EU members are making
when in a few hours time quotas will be phased out. China
has been apologetic and assuring the textile exporters, it
will see and hold back its exports if they really cause
disruptions.
China had to give in black and white, which was to become
legal part of WTO that China will have to abide by the
"ARRANGEMENTS". At a time when China has "invested a lot in
replacing their equipment and upgrading our technology."
Pak exporters are no doubt repeatedly making this
indifferent people of huge investment in probably the
knowledgeable circles, said the other day, first and last
time life find no mention or in whispers it stands anywhere
China and India.
The finest hour has arrived, circles say, they will be
watching how Pakistan exporters fare during trial 2005 year.
TAIL PIECE: The speed with which the TCP has been
procuring but so far is vindictive of the fact that its role
may spill into the coming season also. And, may be, it will
be empowered to carry on job without any formal invitation
or directive as such.
The TCP role linked with cotton purchases, or in louder way,
to stabilise way ward prices. No harm some cotton experts
with integrity of character are picked up to hold
responsibility of the section in the corporation on
permanent basis.
However, care should be taken that its job at any stage will
not be politicised. The reference can be had in, now
defunct, Cotton Export Corporation, which left bad taste in
mouth of some victims.
The cotton growers, according to them, from day one sit on
powder keg until harvest at the end of the season stand by
them. The good 2003-04 season has come, comes with smiles on
the growers faces, in years.
The growers have probably not made any call for rescue, can
be combined effect of hard work, God's mercy, and measures
taken and promptly by the govt growers may cherish ever
after.
Courtesy: `Business Recorder
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Pakissan.com;
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