Tight supply position pushing New York cotton Futures towards 200 cents/lb, domestic prices hit Rs 13,000 mark

KARACHI  (February 14, 2011) : Trading in cotton tightened with prices surging though textile exporters maintained buying with an eye on the orders in hand. Indian refusal to honour contract nearly one million bales has put Pak exporters in lurch, The spot rate thus was marked at Rs11,500 through most of the week days and closed at the same level.
WORLD SCENARIO:
Since rising futures prices are restricting India to hold back Pakistan's over one million cotton bales duly contracted, this country is in hot soup price apart, freight rate against imports from S/W Africa or America will prove hard nut. But there seem no way out. The favour from the EU conferred on Pakistan that too is in the WTO kitchen. Australia to a great extent was hope with enough surplus cotton but lately it is reported that bad weather has played foul with the production likely to go down. Many cotton growing countries had been eyeing on sparing large acres for producing more to gain including the US.
The national cotton council and chance survey during annual Beltwide Cotton Conference had released US to effect planting during 2011 from 12.48 million acres to 12.53 million acres. The high prices signalling from by China's Jhangzhao commodity exchange new lifetime peak at 33,790 yuan per tonne. The major cotton players, tightening belt to exploit from rocketing prices ever since 2006 and had beaten 150 years record.
They are now turning realistic as they expect no major change in world cotton demand but high prices given perception of receding consumption. The rising food prices cannot but restrict apparel buying, besides other needs. China has released 2011 cotton area for sowing up 4.1 percent from a year earlier to 5.17 million hectares, according to Chinese Academy of Agri sciences, cotton futures are seen to have been reaching $2 a pound any day.
On Monday the US cotton futures settled sharply higher on speculative and option-related buying as players piled back into the market, threatening to ignite a fresh rally to record territory. Cotton futures soared last week to their highest in almost 150 years, but then on Thursday endured their biggest one-day fall since early December, Thomson Reuters data showed. Year-to-date, cotton is up almost 16 percent. The key March cotton contract on ICE Futures US rose 6.65 cents or almost 4.0 percent to end at $1.7451 per lb, dealing from $1.6476 to $1.7486, a level representing the top of the 7-cent allowable daily limit. Total volume reached some 33,300 lots, almost 60 percent above the 30-day norm, Thomson Reuters preliminary data showed.
On Tuesday the US cotton futures closed higher on investment fund buying as tight stocks and brisk mill demand trumped an initial selling spree triggered by a rate increase in China, analysts said. Cotton futures stumbled earlier in the session after China increased interest rates for the second time in over a month to cool off its surging economy. But analysts said China will not turn off the spigot in powering economic growth so the potential threat to cotton consumption from an economic slowdown may not materialise at all. The key March cotton contract on ICE Futures US increased 0.78 cent to conclude at $1.7529 per lb, dealing from $1.7294 to $1.7816. Total volume hit some 45,500 lots, more than double the 30-day norm, Thomson Reuters preliminary data showed.
On Wednesday world cotton prices have risen 134 percent since the start of the season, the International Cotton Advisory Committee said, noting increased buying by speculative funds was not to blame for the climb. Other reports appeared which said that the governments should provide more reliable data on world cotton stocks and use, market participants said at a panel discussion. On Tuesday, eschewing suggestions of interventions to help ease the pain of soaring prices. "There is strong demand and shortage of cotton that caused prices to go higher," said Andrei Guichounts, an economist with the ICAC, an association of governments from major cotton producing and consuming countries, which will hold a seminar in China in June on market data.
On Thursday the US cotton futures surged to a fresh 150-year high, as funds and mills continued to chase the rising market on the spectre of dwindling global supplies. The benchmark contract looked poised to hit $2 a lb in the days ahead. March cotton on ICE Futures US rose the 7-cent daily limit to finish at $1.8758 per lb, the highest price since the American Civil War. Trading volume was heavy near 37,600 lots, almost two-thirds higher than the 30-day norm, Thomson Reuters preliminary data showed.
On Friday the US cotton futures jumped to an all-time record at 1.94 dollars per lb on trade and speculative buying as tight supplies are seen pushing the market past the $2 level next week. The benchmark March cotton contract roared up to 1.94 dollars at 9:22 am EST (1422 GMT) before falling on profit-taking to trade at $1.9246, up 4.88 cents on the day.
LOCAL TRADING:
Trading in cotton stayed firm through the session owing to buyers keeping to the sidelines spot rate level was unchanged at Rs11500 as phutti stayed in Punjab and Sindh at Rs4300 and Rs5500. Buyers stayed away in order to save as volatile market was taking price higher. Nearly 12000 bales of cotton changed hands at Rs12,500. The absence of response from India, which has been keeping back over one million bales despite accord. However, talks and bargain are on the way and may yield positive results soon or imports from West Africans countries and the US will be affected.
On Tuesday cotton prices tended higher as a deal struck at Rs13,000 against spot rate staying put at Rs11,500, phutti Sindh and Punjab was unchanged at Rs4300 and Rs5500. In ready off-take 11,000 bales changed hands. Buyers are cautious buying at intervals making sure they save as much as possible. Australia which flooded favourable news is now talking about severe floods estimates nearly seven percent loss.
On Wednesday prices remain range bound in cautious dealings as mills were not ready to oblige the sellers. Spot rate and seed cotton rates were unchanged. The needy cotton consumers lifted nearly 12,000 bales, prices ranging between Rs10,400 and Rs12450. The textile exporters with orders in hand are buying half heatedly. They believe some miracle will happen and rates will turn favourable. The circles were happy textile exports had jumped by 38pc.
On Thursday firm conditions obtained on the cotton market as ginners see short crop from field likely besides India holding back contracted over one million bales. Spot rate stayed put at Rs11,500. In ready 10,000 bales of cotton changed hands at Rs10,500 and Rs12m500. Textile exporters are passing nearly sleepless nights as orders are in hand but are short of raw materials.
On Friday rates were sharply higher due to persisting demand and continued rise in the global market. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11,500. Phutti prices in Sindh and Punjab were at overnight level of Rs 4500-5500. In the ready business about 18,000 bales of cotton changed hands between Rs 10,500-13,000 during improved business. According to the market sources, number of buyers increased as prices hit the new highs in the world and local markets.
On Saturday firmness prevailed as both buyers and sellers were expecting prices to hit new record in the coming days. Karachi Cotton Association (KCA) official spot rate was unchanged at Rs 11,500. Phutti prices in Sindh and Punjab were unchanged at Rs 4500-5500. In the ready business about 8,000 bales of cotton changed hands between Rs 12,000-13,000, they added.
TIME TO FATHOM PSYCHEDELIC DEPTH:
It was back in 60s when the first very reluctantly Martial Law perpetrator amid a big gale responded to leading newsmen question at Palenga Airport that scenario change for the better was just ahead. His patriotism was beyond doubt. But prophetic outlook for better scenario change has turned out to be worst. Ourselves a top producer of cotton in the world today has cut ourselves to a funny dwarf size.
A million bales accord for delivery at Wagah - and in fact nearly half a million of same delivered already-is being latently turned down. In fact Pak importers have been enlightened to save time and rush for renegotiating lest Pakistani miss the bus. The world is wide open with cotton stocks such as some African countries and America with cotton offers much above Pak need so it was or it is not the matter of availability but ethics.
Not ethics of a nation alone but our own psyche what Pakistanis have made full of potential land said to be gift of God. The lint lost in the floods and amount of same due to refusal by India to deliver under legally signed contract could have more than covered had BT cotton spurious seed was sown.
Unfortunately such gainful cottonseed, which has made India second top lint exporters so far is being planned. Such stupid lapses have brought the country to current passe. Who can predict this country with no leadership of vision has a future one aspires for!
PAKISTAN ASKED TO RENEGOTIATE WITH INDIA:
There is no country in the world, super power or its satellites to pull courage and thrash out what is wrong or what is right? No, two men with muscle can determine about facing weakling where he stands without contradiction. This country seized the opportunity to enter into a deal to buy cotton on offer. Later cotton prices rose and the rise sustained giving ground to the stock holders to renegotiate deal giving effect to the ruling prices.
The Pak importers, a traditional Indian customers stared blankly each other recalling to mind that authorities could move the proper quarters asking them to oblige the Pak importers with quantity of cotton at the contracted amount. The victims who were expecting delivery of cotton at the Wagah border, the spot wherefrom Pakistan honoured delivery of 10,000 tons of onion bring down in that country from around Rs100 to just half of the amount. The Pakistanis onion exporters were expecting hearty thanks, Pakistanis were bluntly told to send new cotton team to India for a fresh deal, instead.
The importers in this country were stressing ears to get confirmed what they were conveyed was true. The naturally hilarious sorts, much to the delight of fellow victims sang 'Onion lelo, cotton dedo'. All those who could make out what music was being played burst into laughter. Others, up their hands and eyes pricing through crystal blues skies prayed for a good neighbour. Cotton will be available from Australia, America - but the distance and delay, not to forget price!
WTO DELAYS VOTE ON EU TRADE BREAKS:
When the time lapse dawned it was loud and clear that much hard earned favour of the EU to this extent - had succumbed to gale of ill intentions. However, a WTO body in Geneva delayed for two months a vote that had been scheduled for that Monday on allowing the EU to waive duties temporarily on some Pak importers to help it recover from last summer's floods, sensible and compassionate diplomat expressed.
The report says that discussion is continuing but the decision to delay the vote does not auger well, other expressed. Pakistan had been knocking EU 29 countries doors to come to rescue and some of the leading union member such as Britain, France, Germany have expressed more than "Yes" for the duty waiver while others were in pressure of these, but unfortunately the favour seeking country and authorities perhaps unmindful how Pakistan had come into being remain as such.
The report speaks clearly that it was not immediately clear which countries oppose the measures, which could apply to 75 goods from cotton sheets to textiles and ethanol, which the EU has estimated would boost Pakistan sales by 100 million euros. Any body who has eye on the economy of the country will agree the yield would go a long way in ameliorating the losses suffered by the floods during Aug/Sep 2010. Now hurt gravely but Pak exporters will have to, it seems, wait until 2014 under the GSP plus regime of preferential market access, or, textile exporters should accuse no one else.
FABRIC, YARN LOOTERS: HOW THIS SOUNDS, SIRs:
May God bless, after a few decades, when somebody will live to narrate this story, how many shocked people will take it for granted? Stunned souls would murmur undertone whether story has been lifted from Arabian Night. In 21st century loot and robbery of this type as reported in a dispatch dateline Faisalabad, our Manchester was unbelievable. Who will believe dacoits inroad into a Faisalabad factory producing fabric and yarn, and order workers to load whatever is there on the trucks waiting for the purpose.
This is what RBS textile Director Rana Sohail informed flabbergasted officers. The shortfall in gas, power and other inputs were up afloat in the air, that would make Pak textile products short of edge over the next door rivals, like Bangladesh, India and China. The nature of problem was mainly foreign, the loot and robbery is local which is unheard of in present daytime.
What the rulers and of course, law enforcement agencies to off in reply? Does it not sound strange the agencies claim to have made special arrangements to guard weaving and sizing units. The victims have given out and have expected back from agencies some positive result. But nothing except utter disappointment prevails in Faisalabad, a roaring town with textile mills, known World over. The fact that when Pakistanis wanted to change its old name preferred to chose the name of Saudi ruler Faisal. The fact needs to be translated into honour and dignity when Faisalabad is spoken.

(Source: http://www.brecorder.com/component/news/single/625:news.html?id=1155221)