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TCP's possible entry report breaks the price falling trend on domestic market; US cotton also gets respite


The cotton prices falling without stop had a break on reports that TCP will soon enter market prices rose and it was on Saturday around.WORLD SCENARIO Cotton futures prices are showing down trend from $2.20 in March last to 87-88 cents, which is disturbing major players' mind.

Players believe even much worse in coming days.

In the present debt ridden Europe and budget crisis in US, cotton is unlikely to be investors' choice for quite sometime.The present level is being considered very discouraging and cotton is dubbed as worst performing commodity during the year just ended, open interest said to be indicator of investors exposure at 151,176 lot players see it far too low to infuse enthusiasm.

Investors are being cautioned to keep enthusiasm under check the unwillingly lose at some stage.Homework is required to understand changing scenario.

The longest vacation has offered investors an opportunity to choose from various options initially for changing taste then to opt for oil or precious metals.On Tuesday the NY cotton futures ended firmer on buying by small investors in thin business with investors apparently gone until after the New Year holidays.

The market was shut on Monday for Christmas.

The key March cotton futures added 0.67 cent to close at 87.91 cents per lb, dealing from 87.24 to 88.12 cents.

Volume traded on Tuesday hit nearly 3,100 lots, almost 85 percent under the 30-day norm, Thomson Reuters preliminary data showed.

Since scaling a record top over $2.20 a lb in early March, cotton demand has shrunk and prices have more than halved.On Wednesday the NY cotton futures ended at a three-week high on investor buying in a heavily beaten down market and in anticipation lower prices would lead to lower cotton plantings in the US and other countries in 2012.

The key March cotton futures increased 2.77 cents or by 3.15 percent to lose at 90.68 cents per lb, dealing from 87.75 to 91.91 cents.

It was the highest settlement for cotton's spot contract since December 8, Thomson Reuters data showed.Traded volume on Wednesday was nearly 25,000 lots, almost 60 percent above the 30-day norm, Thomson Reuters preliminary data showed.

Total volume traded on Tuesday reached 3,367 lots, up slightly from the level on last Friday of 2,975 lots, which is the lowest level traded since late in 2008, ICE Futures US data showed.On Thursday, the NY cotton futures settled firmer on buying by small investors in a range-bound market and fibre contracts are seen drifting into the weekend given a lack of leads at this time.

Key March cotton futures rose 0.39 cent to finish at 91.30 cents per lb, trading from 90.83 to 92.77 cents.

It was an inside day since the range was within Wednesday's 90.70 to 93.67 cents band.

The market has staged a modest rebound since hitting a session low of 88.50 cents on Tuesday in the lowest intra-day level for the second position contract since the start of September 2010, Thomson Reuters data showed.

Total volume traded on Thursday amounted to more than 12,500 lots, almost 50 percent under the 30-day norm, preliminary Thomson Reuters data showed.On Friday the NY cotton ended 2011, as the worst-performing commodity market of the year, falling 36.6 percent from 2010, as record prices boosted output and decimated demand, while a shaky global economy scared off investors.

Benchmark US cotton futures closed at 91.80 cents per lb on Friday, up from 91.63 a day earlier but well off a record above $2.20 set in March.

Friday's settlement was down 36.6 percent from December 31, 2010, when it settled at $1.4481 per lb.

Last year, cotton was the second-best-performing market, rising more than 90 percent.

Open interest, an indicator of investor exposure, peaked at 223,405 lots on February 9, data from ICE Futures US showed.LOCAL TRADING Cotton trading firmed on Monday following news that TCP may enter market to purchase and strengthen falling prices.

Spot rate was raised by Rs 150 to Rs 5250.

Seedcotton in Sindh ruled at Rs 1600 and Rs 2300 and in Punjab same was ruling at Rs 1600 and Rs 2700.

Consumers lifted 13,000 bales of cotton in price range of Rs 4500 and Rs 5400.On Tuesday prices continued upward journey.

The buyers were in aggressive mood and lifted lots available.

Spot rate was again raised by Rs 100 to Rs 5350.

Seedcotton prices in Sindh were marked at Rs 1700 and Rs 2300, while in Punjab it was at Rs 1600 and Rs 2700.

Buyers lifted around 30,000 bales of available cotton at Rs 3400 and Rs 5500.

The news about TCP entry has sent prices higher and continue to rise.

TCP has not entered so far.On Wednesday speculation was rife about procurement by TCP and price rise.

The spot rate was up by Rs 50 third time in a row to Rs 5400.

Prices of seedcotton were unchanged in Sindh at Rs 1700 and Rs 2300, while in Punjab they ruled at Rs 1600 and Rs 2700.

Speculation led to rush of buyers who bought 25,000 bales of cotton at Rs 3900 and Rs 5500.On Thursday spot rate got a respite though this week until this day surged Rs 500 to Rs 5400.

Seed cotton prices in Sindh ruled at Rs 1700 and Rs 2300, while Punjab phutti was alone at Rs 1600 and Rs 2700.

In ready off take 25000 bales of cotton changed hand at Rs 4000 and Rs 5500.

The global cotton futures are fluctuating both ways.

Authorities should ponder whether local rate should be linked with global trend irrespective of conclusion locally.On Friday the official spot rate was unchanged at Rs 5,400.

Prices of seedcotton in Sindh were at Rs 1700-2300 and in the Punjab rates were at Rs 1600-2700.

In ready dealings over 25,000 bales of cotton changed hands at Rs 4000-5,500.On Saturday prices firm at the closing session of the year 2011 on the cotton market amid brisk activity.

The official spot rate was unchanged at Rs 5,400.

Prices of seed-cotton in Sindh were at Rs 1700-2300 and in the Punjab at Rs 1600-2700.

In ready dealings over 27,000 bales of cotton changed hands at Rs 3,700-5,500, they added.EU TRADE PACKAGE STILL IN HOT WATERS Nearly two years on, very fervently offered trade package, following merciless deluge left nothing behind - homes, roads, bridges, canals and crops including cotton products of which vitally supplement needs of poor and rich alike, besides adding respectability to kitty.

The textile exporter, hard up already what they called high cost of doing business was simply overwhelming.They probably gave a clarion call to the European Union, business partner for long extended trade package to cover up losses occurred during the damaging floods.

The 27-member state thrashed out the Pak plea and okayed trade concession supposed to have been effective from January 1, 2011, covering 75 Pak export items from cotton sheets to clothing and ethanol - that would have been allowed to enter the EU free of duty, but less than a fortnight remains when another year will start according to latest report the trade package is still in negotiation phase and nothing concrete has come out so far.When time lapse moved ahead to the extent of infusing worry among exporters in whispers came the suggestion that India was blocking the passage in WTO.

India has been won over somehow, now there are Peru, Brazil, Argentina, Bangladesh and Indonesia opposing.Pakistan has hard task now to bring opposing members to sit across the table so that the issue may be resolved as early as possible.

When and how Pakistan manages the problems needs a patient wait.TALKING DECREASING TREND IN GARMENT EXPORTS Acting chairman PRMGEA expressed grave concern over what he said the decreasing trend in Pak garment export.

How much with regret and pains he pointed out that garment, which fetches highest forex return per unit went down by 9 percent during first five months of FY12 and apprehended if the same persisted fall may be up to about 17-20pc, a loss cannot be any thing but untenable to economy of this country.He noted with a degree of satisfaction that fortunately there is no strike, which cause damage to exports, but in effect are notable other factors taking toll of exports, as edge is stealthily taken away by the regional matching exporters who are regularly getting grants from their governments.

Besides the above exporters listed several internal reasons for the decline persistent bad law and order situation followed by lingering energy shortages, which in fact has virtually crippled the textile industry.This was ripe time for responding to orders in hand, but for the high cost of doing business, which included irregular supply and shortages timely delivery turned difficult rather impossible.

However, the constraints that are affecting their valued orders such as water, power, gas are right at their door steps if you keep in view why your economy is weak and strive to strengthen that and motivate others to do what you did.

This country has potential no one so far has endeavoured to fathom.COTTON CONSUMERS IN HOT WATERS The cotton consumers and textile exporters get naturally anxious at peak hours when inclement weather cause damage to cotton crop or past attack take delight in wiping out lush across the field.

The cure is said to be not complicated, but need attention and hard labour.

However, currently pest problem is behind the seen but - deluge is in forefront though spot position is that arrival has been reported fast and giving no way to sellers to keep raising prices.One reason for this also being global rate, which had touched a peak of $2.27 cents a pound, but losing intermittently and nearing close to 80.70 cents point-it had started surging in March 2010.

The justice demands that business should be based on ethics first and ethics last.

Or free trade mechanism be the agreed system.The cotton prices are keeping low staking growers and ginners return.

Inducting a third party to purchase and thus prices go up.

The third party may benefit or it is possible that the TCP may not get the money it had invested.

The TCP supposedly stands loser, whose money in that case is at stake - taxpayers money.

The knowledgeable sources has pin pointed this fact, suggesting that all stakeholders find a way out.

The kitty's care should be in view.

With the mere announcement cotton rate rose by Rs 200 to Rs 300.

But chances always remain prices may go down.

The chance is chance.

The authorities and stakeholders should find some better way out.LOWER PRESSURE GAS BEING SUPPLIED TO TEXTILE INDUSTRY As wind started blowing from Siberia and people felt shivering, particularly the textile manufacturers and exports.

They developed apprehension that they will be soon receiving irregular supplies of gas, particularly with low pressure.

The industry circles, however seized the occasion to accuse suppliers of hatching conspiracy to give ground to the suppliers stop gas supplies during peak hours approaching with pace.

The industry people in order to convince the SNGPL authorities that curtailment will mean massive joblessness and cut in production and dispatches to importers, which has already reached nearly Rs 200 million.Regretting the painful situation exporters said that textile and clothing exports remained stagnant to about $11 billion during 2006-2010, losing growth opportunities against competing countries in the region - India, China Bangladesh etc.

India achieved $24 billion during 2010 from 18 billion and Bangladesh exports to 16 billion dollars in 2006, while Chinese export soared to $206 billion in 2010 from 144 billion during 2006.The industrialists reminded they stand for justified and transparent utilisation of gas as a natural resource in order to boost country's exports and create job opportunities, with the background scenario, expressing disappointment pleaded for improving availability so that exporters place exports ahead of regional exporters.

(Courtesy BR)

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