950825

Cotton market closes

on firmer note

over the week

SHAFI AHMAD SYED

KARACHI: Cotton market closed on firmer note as prices leapt in rapid strides to the Rs 2150 mark on Thursday.

International cotton futures prices have shown a softening tendency lately. Yet they match with local prices as on Thursday.

In Pakistan, the rising tempo is persisting since the previous week despite experts' reassurance that cotton crop output will far exceed than what our mills need and there would be quite a bit of surplus. But, to refer the world prices again is essential which are losing at present, though, still have the potential to take off at slight fund and speculative buying or bad weather news.

India and China are not sure about a bumper crop as the monsoon and floods had done a lot of damage a fortnight back.

However, sudden rise in cotton prices in ready was attributed to lack of smooth supplies due to two-day strike call by the MQM, sligh improvement in yarn and the absence of CEC stocks from the market. But to outweigh all these factors was the sharp rise in phutti prices. Thus Niab, which opened at Rs 1975, closed at Rs 2000. The K-68 opened at Rs 2000 but wound up Rs 25 lower at Rs 1975 and MNH-93 which commenced the journey at Rs 2015 was quoted last at Rs 1990.

In ready, cotton prices moved at the outset in the range of Rs 1790 to Rs 2050 and at close were quoted as high as Rs 2125 to 2150.

Phutti rates also jumped from ruling at Rs 770/800 to Rs 840 per 40 kg, necessitating proportionate rise in cotton lint prices.

The New York cotton prices last week began at 80.75 cents a pound basis October, 78.55 cents basis December and 79.55 cents a pound basis March. During the week fund and speculative buying pushed prices four limits up at 85.20 cents a pound basis October, active December was up 82.90 cents and March 83.60 cents a pound. However, the futures prices lost the steam on report that mill consumption was likely to dip. As a result last quoted lint futures prices were 81.46 cents basis October, 79.30 cents basis December and 80.40 cents basis March.

Cotton experts are optimistic about good cotton crop as the weather has thus far, the crucial stage, behaved like a good child. The Niab is doing well in feeding the needy spinners at reasonably low prices. Lately, on stray bullish factors, prices have been pushing up. It is likely the temp will be retained until upper Sindh and Punjab cotton is in the market by the second week of September at the most.

In the meantime what experts stress on is that the government should exercise all power in its command to fight back the devastating moves by the Japanese government. Unless the matter is taken to WTO and keenly fought, good crop will hardly do much good to the country. A lean hope was injected that those yarn manufacturers who were not affected by the Japanese penal action will be able to export yarn without any hitch.

BANK GUARANTEE

But the news was still being celebrated when news reached the spinners that bank guarantee will be essential in all cases. Or, they must pay the anti-dumping duty and export yarn. Obviously, the bank guarantee matter will need much exercises and consume time and the other, pay anti-dumping duty, and export is out of the question. Those who compete with us in yarn exports, and are supposed to have been instrumental in getting inflicted the admonishment, will never allow us to get the desired result. Let us hope, taking advantage of the WTO rule for freer access into markets, and a good attorney, employed for fighting the case, that Pakistan will succeed in nullifying the effects. This success would overshadow the moves other countries like Taiwan and South Korea were contemplating against Pakistani spinners. If the penalty persists until the end of this century, insurmountable losses will have to be sustained.

It has been suggested by foreign buyers and textile experts that Pakistan should spin better counts which will fetch it more foreign exchange. But our yarn manufacturers stick to 20 and 21 counts. The advice has never moved the spinners and they continue to trek the same patch. Such lower counts are generally spun by the countries which import yarn from us as well as from others. The insistence that spinners will produce low count and low counts alone, breeds misgivings among the exporters, market operators asserted.

The Cotton Export Corporation (CEC) is one organisation, which does not rush to explain if any allegation are levelled by any quarters. Even correction of any wrong figures about its sales of lint is ignored. However, the other day some clarification regarding some reports has come through a spokesman. He said "CEC has a corporation system of management and all decision are taken by the executive body of the Board of Directors after examining each case on merit". Therefore, chances do not exist for any fault or mistake.

TAIL PIECE: It matters little when one reads that a meeting between two equally responsible organizations ends up on a note of dissent. But it matters a lot when it relates to statistics. The TCO and Aptma have put closed capacity of textile units at 2.2 million spindles and 2.8 million spindles. What under the circumstances national planners do, indulge in verbosity?