Bears dominate cotton market

RECORDER REPORT

KARACHI (October 31, 2010) : Bears dominated the cotton market on Saturday as prices fell on slackening demand by the mills, dealers said. The Karachi Cotton Association (KCA) official spot rate was restricted from its upward trend decreasing by Rs 100 to Rs 8,200, they said. In the ready business, activity came down as over 27,000 bales of cotton changed hands between Rs 8,000-8,450, they said.

Seed cotton prices in Sindh and Punjab were lower at Rs 3700-3800, they added. Some cotton analysts said that the market is in grip of uncertainties, as India is looking reluctant in finalising the deals despite having bumper crop during the current season. In fact, they said that the fall in the rates were not unexpected as prices touched the all-time high mark due to higher demand by speculators.

Seemingly, it looks that profit-taking and speculative buying came to a halt as local cotton prices slid further partly in sympathy with the NY cotton futures and because of an ultimatum given by textile industry to close down due to non-availability of gas. In fact, the cotton trade was in the hand of speculators, who were playing game on the back of huge finances, they guessed.

On Friday the US cotton market ended the wildest month in its history, with prices soaring to its highest level since the American Civil War in the 19th century due to a perfect confluence of strong demand, tight stocks and almost insatiable investment fund buying, analysts said.

Prices of cotton in the ICE Futures US stormed to an all-time high of $1.305 per lb on October. 26, climaxing a three-month long rally that saw values climb nearly 80 percent since July. "Cotton ended its wildest month in history," Mike Stevens, a veteran, independent cotton analyst in Louisiana said. "There's nothing (in cotton trading history) that compares to this (month)."

The benchmark December cotton contract gained 3.58 cents to close on Friday at $1.2526 per lb. For the month of October, the key cotton contract had risen 23 percent. It was the largest monthly gain since November 2001, according to Thomson Reuters data. The volume traded on Friday reached over 34,000 lots, about 30 percent higher than the 30-day average at 25,000 lots, the preliminary data from Thomson Reuters showed.

The following deals were reported: 3000 bales of cotton from Shahdadpur sold at Rs 8300, 2600 bales from Mirpurkhas at Rs 8300, 3000 bales from Sanghar at Rs 8250-8300, 2000 bales from Tando Adam at Rs 8300, 3200 bales from Nawabshah at Rs 8300-8400, 2000 bales from Khairpur at Rs 8300-8400, 1200 bales from Rajan Pur at Rs 8400-8450, 600 bales from Uch Sharif at Rs 8250, 400 bales from Bakhar at Rs 8200, 800 bales from Mian Channu at Rs 8100-8150, 400 bales from Garh Mahraja at Rs 8100, 400 bales from Yazman at Rs 8100, 1000 bales from Bahwal Pur at Rs 8100-8150, 1200 bales from Hasilpur at Rs 8000, 800 bales from Chichawatni 8000-8100, 600 bales from Bahawal Nagar 8200-8300, 400 bales from Keror Pacca at Rs 8000-8100, 1000 bales from Haroonabad at Rs 8000-8100, 1200 bales from Khanewal at Rs 8150-8200 and 1000 bales from Burewala at Rs 8200-8300.

APCPA demands ban on cotton, yarn export

RECORDER REPORT FAISALABAD (October 31, 2010) : The All Pakistan Cotton Powerlooms Association (APCPA) has strongly demanded that export of cotton and yarn should be banned till overcoming the shortfall of cotton and severe price hike of yarn in the domestic markets of the country. The import duty on polyester yarn should be withdrawn to eliminate the monopoly of hoarders and speculators controlling the price hike.

Talking to newsmen, Abdul Haq, Chairman, Muhammad Akram Ghouri, Vice Chairman of APCPA said that Rs 4000 per bag of cotton yarn registered within a month, which is hampering the weaving textile sector including hosieries and other yarn consuming ancillary industries. They that more than 30,000 powerlooms have been closed down due to unbearable cost of doing business. If the present situation continued, labour-intensive powerlooms industry would be closed down and about one million workers across the country would become jobless.

The leaders of powerloom sector demanded of the government to immediately ban export of cotton and yarn "in the best interests of the country". Meanwhile, powerlooms owners and their labour staged protest outside their factories in Jhang, Faisalabad, Toba Tek Singh, Kamalia, Sidhar and other parts of Faisalabad Division against shortage of yarn, which is an essential raw material of the powerlooms industry. Protestors said that the unscheduled load shedding of electricity was adding fuel to the fire and unemployed workers were facing difficulties to meeting the domestic life as per routine.

Talking to newsmen, Salamat Ali, Chairman of Pakistan Hosiery Manufacturers & Exporters Association (PHMA) North Zone said that the increasing rate of cotton and yarn as well as its hoarding and speculation are badly affecting the labour-intensive and export-oriented value-added textile industry due to which the prices of polyester and cotton yarn are skyrocketing. He demanded of the government that export of cotton and yarn should be restricted till meeting the demands of the domestic sector and should eliminate the monopolists and capital mafia who are adding fuel to the fire by their speculative activities ignoring the national interests. Salamat said that the spot rate of cotton has reached all-time high level of Rs 8300 per maund in the country due to advance export dealing, while working paper of Federal Committee on Agriculture forecasting that the shortfall would jump to 2.5 million bales due the recent floods.

India unlikely to sell cotton

ISLAMABAD (October 30, 2010) : Indian traders selling cotton to Pakistan are unlikely to honour most of the deals for nearly one million bales after they failed to get registered with export authorities, Pakistani industry officials said on Friday. Textile firms in the world's third-largest cotton consumer were banking on neighbouring India to meet their needs after massive flood damage to the domestic crop caused an estimated shortfall of about 4 million bales.

Pakistani firms say cancellation of Indian contracts or even delay will eat into profits of the textile industry, which accounts for about 60 percent of the country's total exports. Traders had booked about 1 million bales for delivery from November to January from India, the world's second largest producer, industry officials say.

"Eighty percent of the Indian dealers have said they had not been able to get themselves registered for cotton export," Yasin Siddik, vice chairman of private All Pakistan Textile Mills Association (APTMA) told Reuters. "It means that cotton is not coming. It means cotton in our domestic market will remain short and prices will remain firm."

India suspended the online process of registering cotton exports early this month after receiving applications equal to the stipulated exportable surplus of 5.5 million cotton bales. Most Pakistani dealers believe Indian exporters used suspension of registration as an "excuse" to escape their contracts because of rising international cotton prices in recent weeks. Pakistan in April hoped to produce 14 million bales of cotton in the 2010/11 season, compared with about 12.7 million bales the previous year, when the country had to import about 2 million bales of 170-kg each.

Because of August's floods, government and industry officials now estimate output of about 11.6 million bales, meaning more imports from various sources, including India. India has delayed exports by one month until November 1 after late rains delayed the harvesting process, but Siddik said he did not expect much coming out of that into Pakistan now.

Shortage of gas and cotton: exporters may not fulfil Rs 700 million foreign orders

HAMID WALEED LAHORE (October 30, 2010) : Central Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Ejaz Khokhar has feared that exporters might not be able to fulfil foreign orders of $700 million due to gas loadshedding to the textile processing units and exorbitant cotton yarn prices.

Talking to Business Recorder, Chairman PRGMEA said the production cost has risen to 40 percent due to short supplies of gas and cotton, which the customers were not ready to bear with the industry. "The customers are ready to pay 5 to 10 percent extra profit margins to textile exporters in Pakistan, which is still far below to the production cost of the industry," he said. Ejaz was heading to Faisalabad to attend a meeting of processors, badly hit by all of a sudden gas loadshedding.

Ejaz said the production of export orders is stuck in the pipeline due to the halted operations at processing, dyeing and finishing stage with unavailability of gas to the Captive Power Plants (CPPs).

It may be noted that the SNGPL has issued a schedule for the forced closure of gas due to low pressure, leading to crisis in industry and CNG sectors. About 50 percent supply cut has perturbed the industry and CNG stations and they fear heavy losses. "The textile chain right from weaving to downstream is turning into bad shape due to short supply of gas and cotton yarn simultaneously," he said. He added that the garment industry was supportive to the textile processing units's strike, which is being planned in the wake of heavy gas loadshedding in textile hubs like Faisalabad, Multan and Lahore.

He stressed that the government should ensure a cushion to the textile industry on gas load shedding until December this year to enable the industry fulfil export orders.

About unavailability of cotton, Ejaz said many investors, farmers and ginners had withheld cotton stocks to cash the rising cotton prices in the US, already hit the record level of $1.30 per pound.

He said the government should take serious notice of the situation, as the value-added industry was not demanding a ban on exports of cotton or cotton yarn, as it would further be detrimental to the industry. He demanded of the TCP of importing a buffer stock of about 2 million bales immediately, bales, Pakistan is already short of 3 to 3.5 million bales at present. He feared that textile business in Pakistan would shrink heavily, impacting directly job situation in the market and leading to social unrest massively.

Spot rate stays put; lint prices remain range-bound on cotton market

RECORDER REPORT

KARACHI (October 30, 2010) : Official sport rate was unchanged while prices in the ready business showed steady trend despite the bearish trend in NY cotton futures, dealers said on the cotton market on Friday. The Karachi Cotton Association (KCA) official spot rate was maintained at its overnight level at Rs 8,300, they said.

In the ready business over 36,000 bales of cotton changed hands between Rs 8,200-8,600, they said. Seed cotton prices in Sindh were inert at Rs 3700-3900 and in Punjab rates came down to Rs 3600-3700, they added. Market sources said that mills were not so busy as they were in the last several sessions, in the meantime, the exporters came back with little interest.

Commenting on the lacklustre attitudes by the mills, some analysts said that the mills were anticipating decline in the rates in the coming days, but exporters, who are doubtful about the Indian deals were busy in making new deals, they said. According to the reports, India will review its policy on cotton exports in December, Farm Minister Sharad Pawar told the annual Economic Editors' Conference on Wednesday.

According to a report the Pak industry officials said on Friday that the Indian traders selling cotton to Pakistan are unlikely to honour most of the deals for nearly one million bales after they failed to get registered with export authorities. On Thursday the US cotton futures finished lower on fund rolling-related sales, with pressure from the process of moving positions out of the spot contract seen pressuring the market into next week, analysts said.

ICE Futures US key December cotton contract dropped 1.91 cents to end at $1.2168 per lb, three ticks above the day's low. Total volume traded in cotton hit a hefty 56,404 lots at 2:53 pm EDT (1853 GMT), some 131 percent above the 30-day average at 24,379 lots, Thomson Reuters preliminary data showed.

The following deals were reported: 3000 bales of cotton from Shahdadpur sold at Rs 8300-8400, 3400 bales from Nawabshah at Rs 8400, 3000 bales from Sanghar at Rs 8300, 3200 bales rom Tando Adam at Rs 8350-8400, 3600 bales from Mirpurkhas at Rs 8350/8400, 2200 bales from Khair Pur at Rs 8400, 2600 bales from Upper Sindh at Rs 8500/8600, 200 bales from Haroonabad at Rs 8200, 600 bales from Chistian at Rs 8200, 1600 bales from Bahawal Pur at Rs 8200/8300, 400 bales from Hasil Pur at Rs 8200, 1000 bales from Faqirwali at Rs 8300, 200 bales from Ghazi Ghat at Rs 8300, 400 bales from Mian Channu at Rs 8300, 1000 bales from Ahmed Pur at Rs 8300, 1400 bales of cotton from Burewala at Rs 8300-8350, 1000 bales from Khanewal at Rs 8350, 600 bales from Dera Ghazi Khan 8350/8500, 800 bales from Mianwali at Rs 8400/8500, 200 bales from Liyyah at Rs 8500, 600 bales from Shadan Lund at Rs 8500, 800 bales from Sadiqabad at Rs 8500, 1000 bales from Rajan Pur at Rs 8500, 200 bales from Kot Adu at Rs 8500, 600 bales from Tonsa Sharif at Rs 8500, 200 bales from Bakhar at Rs 8500 and 2000 bales from Noor Pur at Rs 8400 said.

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The KCA Official Spot Rate for Local Dealings in Pak Rupees
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FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
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MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
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Rate Ex-Gin Upcountry Spot Rate Spot Rate Difference
For Price Ex-Karachi Ex. KHI. As Ex-Karachi
on 29.10.2010
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37.324 Kgs 8,200 120 8,320 8,420 -100
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Equivalent
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40 Kgs 8,788 120 8,908 9,015 -107
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