TCp non-entry defuses sentiment

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Weekly Updates - Traders' Diary

Cotton trading was smooth on the market when call for inducting TCP let the rate rise, under pinned by global trend-opening day saw spot rate soar by Rs 50 to Rs 5550 gained Rs 50 more but finally lost the gains to close at the lastweek level ar Ts 5500.

WORLD SCENARIO Cotton futures in world markets are keeping higher as was marked in latest USDA report.

March collected 0.58 cents to close at 96.44 cents a pound.

Entrenched players were expecting rate to rule at $1.

China is receiving from India where officials expect cotton to be more than its need.

However, the country with surplus or deficit both moving cautiously in view of the world.Pakistan a fortnight back was enormously disappointed fearing drain of foreign exchange on imports of around two million bales.

But the reports being covered by correspondents currently say that cotton damage has been much less than was given to understand.

The prices had started falling when ginners asked for inductions of the TCP and soon global trend under - pinned spot prices surge to Rs 5600 from Rs 5550.American hit by deluge and drought and still apprehending effects of La Nina plans to sow down 15% to around 12.5 million.

The growers have other crops like wheat, corn and Soyabeans which offer prospects.

The annual Beltwide cotton conf is likely to discuss and decide issues related to developments in cotton production and price trend in coming days.

Experts hope $1 per pound may linger on for some time while others doubt and hold rate at 60 cents a pound.

The coming weeks will thrash haze.

Meanwhile Chinese decision to import cotton to offset global bearish perception.On Monday the NY cotton futures finished near a two-month top on follow-through investor buying, and the market may be bracing for a run at the psychological $1 a lb level over the next few weeks.

The benchmark March cotton contract increased 0.58 cent to finish at 96.44 cents a lb, its highest settlement since the middle of November.

The contract traded between 93.22 and 96.90 cents.On Tuesday the NY cotton futures rose, posting their highest close since November 17 for a second day in a row as speculative funds boosted commodity positions in many markets including the fibre.Some market watchers said investors may be aiming for the $1 a lb level, based on longer-term fundamental issues, like dry weather and competition with other crops, especially food, for acres.

Benchmark March cotton futures finished 0.52 cent stronger at 96.96 cents a lb, the second day in a row that the contract posted its highest settlement since November 17.

March cotton traded in a higher range between 95.70 and 97.08 cents, a level last seen on November 18.

Volume traded in the March contract came to 10,016 lots.On Wednesday the NY cotton futures dipped, slipping off a two-month peak, as investors took to the sidelines ahead of the monthly supply/demand report from the US Department of Agriculture.

Benchmark March cotton futures settled down 0.09 cent at 96.87 cents per lb after dealing between 95.20 and 97.28 cents, its priciest level since November 18.

Volume picked up as investors squared positions before the USDA report.

A little more than 16,000 lots exchanged hands in late New York business, nearly a quarter above the 30-day norm, according to preliminary Thomson Reuters data.On Thursday the NY cotton futures ended lower, unwinding its advance to a two-month peak, after most estimates in the US Department of Agriculture's December supply/demand report were seen as bearish.

Benchmark March cotton futures finished 1.18 cents lower at 95.69 cents a lb after falling to a four-day low at 94.13 cents.

Earlier, it reached a high last seen on November 18 at 97.50 cents.

Volume was a healthy 17,209 lots, above the 30-day norm, according to preliminary Thomson Reuters data..On Friday the New York Cotton futures finished with modest losses within their new higher range, with little news to move prices in either direction and most investors keen to maintain steady positions ahead of the long holiday weekend.

US commodity and financial markets will be closed on Monday for the Martin Luther King holiday.

Benchmark March cotton futures settled slightly lower at 95.47 cents a lb and held in a narrow range between 94.52 and 95.98 cents.

Earlier, it reached a high last seen on November 18 at 97.50 cents.

The contract finished the week with minimal losses, but still in the middle of the higher plateau carved out since the start of the year.

March volume was light at 9,745 lots, well below the previous session's robust tally of 17,209 contracts.

DOMESTIC TRADE On Monday the ECC decision on TCP entry into market yet to be unfurled, the sellers pushed cotton spot rate by Rs 50 to Rs 5550.

Seed cotton in Sindh quoted higher at Rs 2000 and Rs 2400 while in Punjab phutti ruled at Rs 2200 and Rs 2800, price hike apart buyers laid hands on 13,000 bales at prices ranging between Rs 4000 and Rs 6000.On Tuesday improved trading in cotton, again spot rate was raised by same amount to Rs 5600, phutti prices in Sindh and Punjab stayed.

Millers lifted around 2000 bales of cotton at around Rs 4500 and 6000.

Exporters are in market covering along the millers.

The TCP entry is awaited.On Wednesday cautious selling was witnessed on cotton market where spot rate stayed put while phutti in Sindh was downing around Rs 2000 and Rs 2400 while same item in Punjab was quoted around Rs 2200 and Rs 2800.

Around 1600 bales of cotton changed hands at Rs 4500 and Rs 6000.

Some mills preferred to stay on the sidelines, apprehending entry of the TCP.

Currently local prices are being influenced due to reported low production in major countries.On Thursday firm trend in cotton was marked as market cherished foreign buyers may have been working for delivery.

In all 13,000 bales of cotton changed hands at Rs 4300 and Rs 6000.

In Sindh phutti was quoted firm at Rs 2000 and Rs 2600 in Punjab phutti prices ruled at Rs 2400 and Rs 2850.

The cotton sellers were jubilant as they learnt China will order 1.1 million ton of cotton for 2012.On Friday mills and spinners kept on the sidelines in expectations of fall in prices due to better-than-expected production this year.

The official spot rate was held at the overnight level at Rs 5,600.

Prices of seedcotton in Sindh were at Rs 2000-2500 and in the Punjab at Rs 2200-2800.

In ready dealings about 10,000 bales of cotton changed hands at Rs 4,500-5850.On STURDAY rates came down in the absence of fresh leads.

The official spot rate after maintaining firm for several sessions, was reduced by Rs 100 to Rs 5,500.

Prices of seedcotton in Sindh were at Rs 2000-2400 and in the Punjab at Rs 2200-2700.

In ready dealings about 13,000 bales of cotton changed hands at Rs 4,200-5750.

SAVE EXPORT MARKETS FROM GOING OUT OF HAND The exporters, particularly textile exporters have finally come down to cautioning government, Pakistan may lose Asian markets.

Why this change of call from making available gas and power to worry how to keep currently markets in Pak hand from evaporating into thin air.

Iftikhar Ali Malik, vice president Saarc CCI and former FPCCI Chief whose desperate call must have reached to relevant quarters by now should probably been knowing wealth is not streaming down so that call is responded soon and positively.

Change has been the universal call coming from four corners but none has proved positive and worthy delivery.

Nearly half a dozen rulers with obvious hope and aspiration ruled from three-four years to over 10 years at a stretch but none of the rulers left behind a sweet memory - such memory as Kamal Ataturk and a French leader with glorious term behind in recent history.

None ever had repentance he did not deliver the poor of the country expected of him.

The rulers of the day took relief in accusing those who ruled for nothing.Iftikhar Ali Malik has seen this country ruled by people both dictators and democrats with hardly any miracle looking back with pride.

Tired of asking gas and power and moving (loans) and getting dismal return, Iftikhar Ali Malik asked the authorities to heed suggestions of representatives of trade and industries.

He takes for granted that trade bodies will find ways that will see their grievances heard and resolved in Assemblies.

PCGA THREAT TO STOP BUYING PHUTTI Sympathy with growers - of cotton is universal as they cast all they have in a bid to cultivate good yield - even day's rest and nights' sleep.

Ginners for some weeks have been advancing call for inducting TCP to buy one million bales so that growers get due return of their crop.

The TCP has expressed its inability to shoulder responsibility until lapse of one month.

May be its involvement in urea and sugar procurement.

But TCP is now free of its responsibilities and ECC may now press for procurement of one million bales of cotton.

However the ECC may take time and weigh the importance before giving off its verdict.However, sources who have been close to the cotton and textile trade suggest to look back whether TCP suffered in process of helping growers or the ginners.

Comparatively lower cotton rates locally lure cotton exporters who along with the spinners and textile millers are active on the market.

Sources were earnest in advising different cotton and textile sectors to sit across the table and find out a meeting point in the best interest of exchequer.Growers need every conceivable help against deluge and pest attack.

But not at the cost of tax payers money.

After a decade lapse growers and related people should be in search of acceptable cure.

COTTON GROWERS SUFFER RS 57.6bn LOSS That some way are found to save the Pak cotton growers was delayed to an extent that loss suffered by growers is put at Rs 57.6bn.

By any account the loss calculated by himself a cotton producer has to be taken for granted.

A proxy call by ginners for the growers was taken lightly.

The approach to PM who took no time to say yes, as held up in the ECC where TCP was kept busy for tackling sugar issue and then Urea.The ginners - have continued to knock the doors of authorities who matter.

And now former Speaker National Assembly Syed Fakhar Imam sounded rather loudly financial loss to cotton growers was unbearable.

Besides, heavy rains he said growers were facing great difficulty because of higher cost of inputs before harvest and later cotton was offered low price.

The former speaker NA strained his mind to invite competition commission of Pakistan to probe into the matter as the monopoly and cartelisation of the caused this massive damage to the grower.

He said growers suffered Rs 57.6bn as he said growers were paid Rs 400 less than rate of phutti.How relevant authorities surmise the whole issue depends on their angle.

But what is pretty clear is cotton growers may go for some other better paying crops.

REVISED COTTON TARGET MAY LIKELY BE MET The nature is thoroughly merciful while estimating needs be he a consumer or the producer.

To infer that deluge will render crops rot or give bumper production both are a perception.

Based on this, manipulating such price based on which to benefit some while hurt the bulk of people can hardly be justified. Unfortunately every new season brings in its wake one or the other illusion which has nothing to do with the economy or prosperity of this staggering country.

The TCP has not entered the market but lint and seedcotton prices have already been raised by Rs 200 to Rs 300 while reports sounding pleasing lure that despite two million bales cotton crop destroyed by floods revised target was likely to be met.In the present case the PCGA is in the field asking TCP to start buying to save growers from losses.

The major victims to he by this move, the APTMA in plane language said that the PCGA wants to pocket more profit with the purchase of cotton through the TCP as 60percent of cotton bales have already reached the market.

The purchase of cotton by TCP would not provide any financial benefit to the growers, but just the ginners who are actively playing their role as middlemen to grease their palms.

Courtesy: Business Recorder

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