Cotton prices perk up again
DR ZAFAR HASSAN LAHORE (November 26, 2010) : After the free fall of New York cotton futures prices soon after attaining majestic level of US Cents 157.23 per pound on 10th November 2010 domestic lint prices also continued to swing downwards over the past fortnight or so. However, pursuant to the firmness and gains in the New York futures prices over the last couple of days, local lint prices also firmed up at midweek.
Market sources say that in addition to positive fundamentals in the domestic cotton condition as we face a net deficit this season, growers withholding seedcotton (Kapas/Phutti) and the ginners selling sparingly have also contributed to the gains in local cotton prices. Though cotton prices were on a week footing just a day or two earlier, they have risen by about Rs 400 to Rs 500 per maund (37.32 Kgs) presently.
Just like the past few months, when the New York cotton futures prices (ICE) remained determined to follow their single-tracked upward journey to unprecedented heights, domestic prices in Pakistan also followed in tandem. However, if the New York futures and also physical cotton prices consolidate their gains and establish a stable range of working prices, Pakistan lint prices may also stabilise mostly at the prevailing levels.
The domestic cotton output during the current season (August 2010-July 2011) is now reckoned to range between 11 million to 11.75 million domestic size bales on an ex-gin basis. The domestic mills are expected to consume between 14.5 million to 15 million bales this season necessitating an import of two to three million bales (170 Kgs). With government indecision and uncertainty still operating in India concerning opening up and resuming cotton exports, Pakistan mills may willy nilly have to import their lint requirements from Brazil, USA, West Africa or the CIS, wherever and whenever feasible.
It is roughly estimated that from the above noted cotton import requirements, Pakistan has already booked one million bales to 1.5 million bales (170 Kgs) of sundry styles from different origins, including India, before exports were banned from the latter source.
During the current season (August 2010-July 2011), some commercial quantities of cotton started arriving as early February/March 2010. Next season viz 2010-2011 when the growers are very well-heeled and anxious planters of cotton, new crop (2010-2011) arrivals in relatively larger quantities could start arriving early.
Seedcotton (Kapas/Phutti) prices on Thursday were about Rs 100 to Rs 200 per 40 Kgs higher compared to a day earlier. In Sindh, they reportedly ranged from Rs 3,600 to Rs 3,800 per 40 Kgs, while in the Punjab they were said to have ranged from Rs 3,600 to Rs 3,900 per 40 kilogrammes in a steady to firm market.
Lint prices gained about Rs 400 to Rs 500 per maund (37.32 Kgs) on Thursday. In Sindh, lint prices reportedly ranged from Rs 8,400 to Rs 9,000 per maund (37.32 Kgs), while in the Punjab they are said to have prevailed between Rs 8,300 to Rs 8,800 per maund, according to the quality. Little business was reported till the evening as the growers were sitting tight with their produce where as the ginners were commensurately asking for higher prices. Sales were reported later at night.
Yarn prices were reportedly weak but the expectation was that because China is still enquiring for yarn, yarn prices cannot be too bearish. Traders also conveyed that in the overall assessment, lint prices cannot go down too much.
Earlier in the week, it was reported that yarn and textile exports registered a record performance last month. The knitwear sector exports were said to have increased by 39 percent while the exports of cotton yarns, bed wear and readymade garments recorded an average growth of 33 percent each. Overall exports from Pakistan have shown handsome growth and are thus expected to achieve the target of US Dollars twenty billion during the ongoing fiscal year (July 2010-June 2011).
In the evening lint prices moved up substantially so that Sindh styles sold from Rs 8,400 to Rs 9,000 per maund (37.32 Kgs), the latter prices being for lint form Upper Sindh (K-68). In the Punjab, cotton prices ranged from Rs 8,300 to Rs 8,800 per maund, according to the quality.
In actual sales which were reported on Thursday, 400 bales of cotton from Tando Adam in Sindh sold at Rs 8,300 per maund (37.32 Kgs), 400 bales from Nawabshah sold at Rs 8,500 per maund, 500 bales from Khairpur district sold at Rs,8,700 per maund, while 800 bales from Upper Sindh (K-68) sold at Rs 9,000 per maund showing a significant upward leap of cotton prices. In the Punjab, 400 bales from Bahawalnagar were said to have been sold at Rs 8,500 per maund in a very tight market.
On the global economic and financial front, despite the decrease of jobless claims in America and better spending by the consumers, the overall situation remained negative. In the forefront, the financial woes of Ireland have unsettled the entire banking and fiscal system of Europe with pointers that Portugal and Spain are poised to go down the same slippery path. Therefore from Iceland and Ireland to Greece, Portugal, Spain and other countries in the southern periphery of Europe, sovereign debts accompanied by gross mismanagement, speculation and malfeasance have shaken up the Euro, the so-called single currency. Only Germany seems to be floating high.
However, Chancellor Angela Merkel has opinionated that the private sector also has the duty to chip in and help stabilise a highly wayward financial situation in several Eurozone countries. Merkel's proposal has brought lot of criticism.
Thus the fiscal fortunes of Europe continue to wobble interminably leaving little apparent hope for even a modicum of social and economic stability in Europe. Now fears have arisen that economic crises presently prevailing in Europe and indeed around the world are threatening to unravel and undo the very foundations of human civilisation itself.
In a recent lecture, Dr Jean-Francois Daguzan, senior research fellow at the Foundation for Strategic Research, France, told an audience in Islamabad that the recent economic and financial developments including currency wars have the portents to destabilise the entire world and that the balance of power has already shifted from existing countries to new countries.
He had serious doubts that the United States could continue to bear the burden to bring economic, financial and social stability to the disoriented world. He is also reported to have said that though India a big economy, but it remains incapable to comprehend the global changes. He felt that China and not the United States could assist in stabilising Europe.
Lint prices remain range-bound; spot rate unchanged on cotton market
RECORDER REPORT
KARACHI (November 26, 2010) : Firmness prevailed on the local cotton market on Thursday as growers and ginners held the stock on expectations of further rise in the rates, dealers said. The Karachi Cotton Association (KCA) spot rate was left unchanged at Rs 8,300. In the meantime seeds cotton prices in Sindh and Punjab managed to gain Rs 100 to Rs 3,600-3,800, they said.
In ready business trading activity came down as nearly 22,000 bales changed hands at Rs 8,000-8500 because growers held back the unsold stock for better return, they added. Some analysts were of the view that rising trend in the New York market helped the rates to stabilise in the domestic market and for other reason they observed that the growers and ginners were not willing to sell the stock at the present level.
Other analysts said that despite the fall in the prices the sellers are dreaming for the highest rates as they have done during the last month. According to a report soaring cotton prices and higher wage deals in producer countries will challenge the ability of European retailers to push through costs to cash-strapped consumers in their home markets, potentially hurting margins. Cotton is at a record high and workers in countries such as Bangladesh and China, major suppliers to the West, won bumper wage increases after strikes and political pressure - a double hit for retailers reliant on price-conscious European shoppers.
On Wednesday the US cotton futures bounced to a firmer finish, as technically oversold conditions and prospects of greater Asian demand growth helped prices snap a two-week losing streak that shaved more than 26 percent from the market.
The benchmark March cotton contract on ICE Futures US climbed 4.80 cents, or 4.3 percent, to settle at $1.1659 per lb, near the upper end of its $1.1113 to $1.1771 session range.
The bounce made cotton the biggest gainer in the CRB Index on Wednesday. Volumes were relatively firm ahead of the US Thanksgiving Day holiday on Thursday. The total stood at 27,038 lots by 3:28 pm EST (2028 GMT), up more than 50 percent from year-ago levels, Thomson Reuters preliminary data showed.
The following deals were reported: 1600 bales of cotton from Shahdad Pur sold at Rs 8000-8200, 800 bales from Matiari at Rs 8000-8050, 1600 bales from Nawabshah at Rs 8200-8300, 1000 bales from Mir Pur Khas at Rs 8000-8200, 1000 bales from Khair Pur at Rs 8200, 3000 bales from Upper Sindh at Rs 8200-8500, 400 bales from Layia at Rs 8000-8100, 800 bales from Mian Channo at Rs 8000-8200, 200 bales from Dhanoot at Rs 8000, 200 bales from Shujabad at Rs 8100, 1400 bales from Ahmed Pur at Rs 8200-8500, 2000 bales from Jalal Pur at Rs 8200-8500, 1200 bales from Fazil Pur at Rs 8300-8500, 1600 bales from Rajan Pur at Rs 8300-8500, 2000 bales from Ali pur at Rs 8400-8500, 400 bales from Tonsa Sharif at Rs 8500, 400 bales from Shadan Lund at Rs 8500, 400 bales from Jam Pur at Rs 8500 and 1000 bales from Liaquat Pur at Rs 8500.
Hefty power bills: power-loom owners to take out rally on November 27
RECORDER REPORT MULTAN (November 26, 2010) : The officials of Multan Electric power Company (Mepco), by sending hefty electricity bills, have compelled the owners of power-looms and cottage industry to shutdown their units once and for all. Power-loom owners have announced to take out a protest rally outside Multan Press Club on Saturday (tomorrow) against the highhandedness of Mepco officials.
All Pakistan Power Looms Association Secretary, Khaliq Qandeel Ansari revealed that electricity meters are being stolen daily from poles. More than 100 meters were stolen overnight in Manzoorabad sub division, but Mepco staff is not ready to give these meters in safe custody of the consumers.
He further said the entire department of Mepco is forcing small industrial units such as power-looms to closedown, partially due to load-shedding and partially by issuing them inflated electricity bills. He pointed out that over 50,000 power-looms are running in Multan to provide clothes, bedwear and other exportable textile items but many looms have closed down due to imperious and arrogant behaviour of Mepco officials.
Ansari said that with the benign help of Mepco Chief Executive Guftar Ahmed, XEN M&T and XEN Operation send their SDOs to the owners of individual industrial units, asking them to grease their palms if they want to receive their utility bills according to the previous routine. If a unit owner dares to refuse giving illegal gratification to them, he has to face the music with hefty bill. He said that the 'cruel officials' usually send over Rs 50,000 electricity bill to power-loom owners previously getting Rs 20,000 to Rs 40,000 amount bills.
RGST bill mere replica of VAT Act 2010: Parekh
KARACHI (November 26, 2010) : Bureaucracy has failed to come up with pragmatic reforms in GST, as it is a complete replica of VAT Act 2010, which the government tried to introduce in the last Finance Bill, said Saleem Parekh, Chairman, Pakistan Hosiery Manufacturing and Exporters Association.
He revealed that VAT ACT 2010 was unanimously disapproved by the stakeholders on the grounds that with the presence of existing General Sales Tax Act, 1990, there is no need to introduce an altogether a new law. He said the existing law of GST was now very much established and both the tax authorities and the taxpayers are very much well versed with the existing law and procedure.
The Finance Minister after appreciating the genuine reservations of the taxpayer community had specifically assured in his budget speech that no new VAT law will be introduced and necessary changes and amendments will be made in existing GST law. However it is indeed an irony that despite all this hue and cry and lapse of time the same VAT ACT 2010 is presented before the Senate with just change of name as Reformed General Sales Tax Bill, he added.
Parekh raised serious reservations on the draft bill and claimed that there is no need to introduce altogether a new law, with unlimited discretionary powers to the bureaucracy and tax officials who remain unquestionable in the draft bill.
He said that business community is not against the broadening of tax base, withdrawal of unnecessary exemptions and extension of GST on services or any other untapped sector, however, they will not allow government to further squeeze the already existent taxpayers.
He claimed that business community was not taken on board upon draft bill of RGST. The content of this bill apparently reflects bureaucratic approach towards taxpayers1 community, he observed. Parekh said that without the co-operation and coordination of all the stakeholders the RGST would not at all be beneficial. He demanded that the government and the opposition must carefully go through and peruse the contents of the draft reformed GST bill comparing it with the existing law before taking any initiative on it.
He said that it has been proved that it is always difficult for any society to adopt a new law, therefore, at this crucial time making the law more simplified and focusing on broadening of tax base and tax net is more feasible than introduction of new law which will prove an exercise in futility and sheer waste of time and energy.-PR
July-October cotton export down 12 percent
RIZWAN BHATTI KARACHI (November 25, 2010) : The country's raw cotton export has registered a decline of 12 percent during first four months of current fiscal year due to shortfall in the cotton crop and high price trend in the domestic market, exporters said. They said the country has already missed its cotton production target by some 1.4 million bales during the last fiscal year and as per current calculations of the crop assessment committee, the country's cotton production was around 12.7 million bales against the target of 14.1 million bales in FY10.
"Last year cotton crop in Punjab was badly hit due to unavailability of pesticides, however, Sindh achieved record cotton crop of 4.3 million," they added. As per official statistics, overall cotton exports have registered a decline of 12 percent as compared to the same period last fiscal year.
The country exported cotton worth $62.519 million during July-October of current fiscal year as compared to exports of around $70.599 million in corresponding period of last fiscal year, depicting s decline of $8 million. However, month-on-month basis cotton exports during October 2010 posted an increase of 84 percent to $55.317 million as compared to exports of $30.141 million in October 2009.
Although, contamination ratio in Pakistan raw cotton is higher than India, USA and other countries, which brought about the decline in the country's raw cotton export. However, firstly this year domestic cotton prices were much higher than international market and secondly local shortage has hampered the raw cotton exports, exporters said.
Local cotton prices surged to Rs 11,000 per maund in domestic market and during last two months prices hovered at Rs 2600, they added. They said local raw cotton exporters are facing challenges of quality in the international market, which benefits rival India, while shortfall in crop has also put negative impact on the export of cotton.
Talking about the contamination, they said "contamination ratio in the country's raw cotton is around 9.5 percent against 3.5 percent in the Indian's raw cotton." Local textile industry is also facing a shortage of some 5 million bales annually, which is another major factor for the decline in raw cotton export. They said this year local demand stands at around 15-16 million bales as compared to estimated production of 11.7 million bales which means high import of cotton will be required to meet local consumption.
Hectic activity seen on cotton market as rates continue to decline
RECORDER REPORT
KARACHI (November 25, 2010) : Sizeable business was seen on the cotton market on Wednesday as mills were not ready to miss a single lot on the falling rate, dealers said. The Karachi Cotton Association (KCA) spot rate was left unchanged at Rs 8,300. In the meantime seed cotton prices in Sindh and Punjab resisted further slide at Rs 3,500-3,700, they said.
In ready business trading activity improved as nearly 38,000 bales changed hands at Rs 7,700-8700, they added. Market sources said that after the recent fall in the international market, the ginners adopted flexible attitude, came out to sell the old stock. They said that the ginners were trying to sell the old stock following the news of sizeable arrivals of phutti.
Commenting on the recent fall in the NY cotton futures they said that prices fell in the domestic market after continued decline on the international market but today the NY cotton opened with gains and as a result, the local rates may stabile in the near future.
Some experts have different view about the prices, they said after record rise in the world and local market as well, prices fall may be accelerated as hopefully, speculative rise is expected to meet its logical end. Meanwhile, no impact of rise or fall was seen in the local market activity as buyers were busy due to declining trend in the rates, they observed.
Furthermore, while US cotton ruptured support at the key 50-day moving average and its 50-percent Fibonacci retracement level in Tuesday's third straight limit-down close, technical analysts said other signs show that selling may soon run out of steam.
Cotton analyst John Flanagan of Flanagan Trading Corp in North Carolina noted, pent up selling was not evident in synthetic pricing through the options market that has shown up in other recent limit-down slides. On Tuesday the US cotton futures fell by their daily six-cent limit for the third straight session, notching their biggest three-day decline in more than 15 years, as Korean tensions and euro zone debt concerns accelerated the market's recent correction from record peaks.
Cotton has been hit hard in recent weeks by mounting fears that China may take aggressive action to curb inflation running at a 25-month high, raising interest rates or capping domestic prices with measures that could crimp commodity demand or drain liquidity from bubbling domestic markets. The benchmark March cotton contract on ICE Futures US ended down the six-cent limit, or 5.1 percent, at $1.1179 per lb.
The following deals were reported : 2000 bales of cotton from Shahdadpur sold at Rs 8000-8300, 1400 bales from Tando Adam at Rs 8000-8300, 1000 bales from Sanghar at Rs 7800-8000, 3000 bales from Nawabshah at Rs 8000-8300, 1600 bales from Mirpurkhas at Rs 7800-8200, 1000 bales from Khair Pur at Rs 8200-8300, 4000 bales from Upper Sindh at Rs 8200-8500, 1600 bales from Mianwali at Rs 8700, 1200 bales from Bahawal nagar at Rs 7900-8500, 200 bales from Bakhar at Rs 8300, 400 bales from Rajan Pur at Rs 8300, 200 bales from Fazil Pur at Rs 8300, 2800 bales from Rahim Yar Khan at Rs 8250-8300, 2200 bales from Chichawatni at Rs 8000/8300, 1000 bales from Uch Sharif at Rs 8300, 400 bales from Khan Pur at Rs 8300, 1000 bales from Garmah Raja at Rs 8200, 200 bales from Khanewal at Rs 8200, 2200 bales from Liaquat Pur at Rs 8000-8200, 200 bales from Arifwala at Rs 8200, 400 bales from Jam Pur at Rs 8200, 200 bales from Muridwala at Rs 8100, 1000 bales from Layia at Rs 8000, 2000 bales from Sadiqabad at Rs 8000, 200 bales from Alipur 8000, 200 bales from Lodhran at Rs 8000, 200 bales from Hasil Pur at Rs 8000, 400 bales from Mian Channu at Rs 8000, 200 bales from Vehari at Rs 8000, 800 bales from Dera Ghazi Khan at Rs 8000, 200 bales from Shujabad at Rs 7900, 2000 bales from Haroonabad at Rs 8000, 200 bales from Arifwala at Rs 7800, 200 bales from Gaggo Mandi at Rs 7700, 200 bales from Sahiwal at Rs 7700, 1000 bales from Haroonabad at Rs 7900-8000.
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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 23.11.2010
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37.324 Kgs 8,300 120 8,420 8,420 NIL
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Equivalent
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40 Kgs 8,895 120 9,015 9,015 NIL
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