20000327

Cotton prices keep

rising on perception

of exporters' commitments

SHAFI AHMAD SYED

KARACHI: Cotton sellers' perception that exporters will meet their commitments of exporting over 400,000 bales has been keeping the prices on the uphill course, knowledgeable circles said on Saturday.

The short staple Niab was highest gainer last week which opened its account at Rs 2,167.50 and closed at Rs 2,225. The K-68 started at Rs 2,368.75 and closed at Rs 2,397.50 and MNH 93 commenced at Rs 2,407.50 and wound up at Rs 2,436.25 all with sales tax.

WORLD SCENARIO

Futures at New York Cotton Exchange, both spot May and distant July, rose by over two cents. Rains have built up hopes that planting would be starting in time.

Earlier, trading saw speculative selling into stops pressured the market leading to dips, rain in US Delta and the South-East pressured the futures. Buying during mid-week by a major merchant and rain in west Texas sparked full selling into stops. USDA export sales were likely to touch 40,000 to 70,000 running bales.

Towards the close news of further rains and technical weakness conspired to spur further speculative fund long liquidation in the market.

"Spices continued to liquidate this marked," traders said key May fell 0.23 to 58.81 cents a pound which moved in the range of 59.55 and 58.50 cents a pound. New crop December inched up 0.09 to 61.33 in the range of 61.50 and 61.05 cents a pound. Dealers felt resistance in key may should be seen at 60 cents.

COTTON POLICY

The announcement of cotton policy was stated to have been delayed due to Pakistan Day and Clinton's visit. People in the trade, particularly growers, have been anxiously awaiting it.

However, according to some reports the principle of free market is likely to be done away with.

Such arrangement is preferred by people depending on the circumstances. At times this principle of free market stands the growers in good stead, and at other, it suits most of the other segments. However for procurement, to be started after a gap of a couple of years the government will have to induct some agency to see that prices do not fall below procurement price.

YARN PRICES

The value-added sector of cotton textile in a statements tried to convince the government that a check on yarn prices or quantity for exports in necessary to keep it alive and kicking. The sector leaders have been repeatedly saying that the benefit was not being passed onto it when cotton prices were down at around Rs 850/1000 per maund. The result is that booking new orders is nearly impossible. This is not all, but the misfortune is that orders in hand are not possible to execute.

They urged the government to restrict yarn exports at 15m kg; export refinance facility should be withdrawn and export duty be imported. Spinners, however, do not accept the charges.

DUMPING DUTY

Pakistan has again taken its case of dumping to the Textile Monitoring Body (TMB) against the US which stepped dumping duty on combed yarn.

Report has come that Japan may extend dumping duty beyond August 2000. The failure in presenting its case was due to alleged lack of knowledge on the part of the lawyer engaged for the purpose. Pakistan is already losing some 198.50 million dollars. The other case involves exports of 5.2m kg. It seems imperative that some restraint is adopted by Pakistan. Probably switch-over to value-addition would help.

TCP BLOCKED

Trading Corporation of Pakistan (TCP) at 49/50 cents a pound for Alaka and Afzal.

The last tender opened by TCP not only fetched lower price but only 10,000 bales, out of 70,000, offered were bought. This has eroded the initial euphoria and has prompted people to do a lot of thinking. The corporation has 5,25,000 bales to sell. Out of it only 1,77,000 bales have been sold, and only 1,900 bales have been shipped. The road ahead appears to be bumpy. International prices have tumbled to 58 cents only.

TAIL PIECE: Argentina has complied with the recommendation of the Textile Monitoring Body and lifted ban on Pak woven and other fabrics. The trend set by Argentina is indeed praiseworthy. The influential and bigger countries should shed the attitude of arrogance.