Cotton price shoots up with short supply of fine quality

The cautious trading attitude was maintained by buyers on the market, even though cotton arrival was larger and ginners had in ginneries some 0.8 million bales but sellers were not flexible to ease the high cost of doing business. According to arrivals factories received 11.349 million bales. Again on the last session of the week prices moved up .The spot rate also raised by Rs50 to Rs 3650 and the lint prices shot up to Rs 3800.

The increased cotton production is God’s mercy as discouraged cotton growers switched over to rice production, which ensured better return than cotton. The market sources now predicting better cotton prices ruling may prompt the growers to cultivate cotton on larger area.

Meanwhile, the TCP role in stabilizing cotton rate was being appreciated but it was not clear the corporation did a losing business. In total the two-day saw cotton lifted around 20,000 bales. The spot rate was put at Rs 3600, phutti was selling at Rs 1800 per 40 Kgs and cotton sold in ready in price range of Rs 3425/3700 per manud.

On Wednesday 5000 bales of cotton changed hands in price range of Rs 3400/3700. The ginners with higher arrivals and ready stock are keeping the cotton consumers guessing, market sources said. The cotton buyers, nearly rebuffed by Indian exporters who are dilly-dallying want to buy local cotton but somehow at reasonable rates. Exporters of textile products were nearly allergic at the inflexible attitude of the ginners. The production cost is high in Pakistan and hence, Pakistanis loss edges in the face of rival exporters.

On Thursday the pent-up buying emerged with spinners and textile exporters pouncing to cover the immediate pending needs. The sellers enjoyed offering more particularly the low quality cotton seen piling up. However, they had to sell quality cotton side by side to allure the buyers over 8000 bales of cotton changed hands in high price range of Rs 3500/3700 per maund. Spot stayed put at Rs 3600. Ginners pressure was that if the TCP entered in the market, millers will turn to quality lint.

However, the corporation has not entered so far. The growers have now come under pressure to finish their sowing in Sindh by May 15, to get quality yield. On Friday dullness prevailed on the cotton market as participants were conspicuous by their absence, dealers said. The official spot rate was unchanged at Rs3600. According to the market source they were not aware of the deals finalised in the upcountry centres as main participants could not reach the destination in the absence of normal flow of traffic in the city following the strike call given by the Karachi Transport Ittehad.

On Saturday prices moved up on the cotton market, as ginners raised asking prices as stock of fine quality coming down with the passage of time, dealers said. The official spot rate was raised by Rs 50 to Rs3650 approximately, 13000 bales changed hands between Rs3375-3750, they said.

In the meantime, it is likely that prices may go up slightly in the near future. According to the market source, mills mostly did buying of fine quality to meet the export orders. The mills are bound to meet the export consignments, despite the fact that local exporters are not benefiting or gaining the desired profit due to high cost of production, they added. Some cotton analysts were of the opinion that it is likely that the Trading Corporation of Pakistan (TCP) may come in the picture in the near future owing to lucrative rates.

The cotton ginners cancelled 0.4 million bales contract with the TCP due to rising prices, which have taken ginners out of harm. The time was ripe when arrival was quite swift and the TCP was being asked to come to ginners bail out. Some 13 procurement centers were set up when some 0.195 millions had reached at the doors of TCP and ginners decided to stop making further delivery and suffer the known loss.

There was a time when cotton consumers were free to buy lint at their dictated prices. Since the growers were to open risk who neither could keep back cotton at their places for fear of losing quality nor sell at the whimsical prices. The cotton exporters were inducted injecting some relief to the growers. Later under a policy the growers, if they so liked, were at will to export. This gave growers further relief.

The ginners at times come under the pressure of cotton buyers, who on different pretext, larger arrivals or quality reason dictated prices. Such odds necessitated to induct TCP to also buy cotton at the ruling rate, to help growers and ginners to earn better return. But this service given by the TCP to please some does not pay them well. As the prevailing rate is calling for the TCP to sell the cotton stock, are they free to do so?

The authorities should find out some safe ways so that none is left at the mercy of fate or be made sacrificial goat. The growers, who are hyped for taken care, suffer most, the TCP, if supposed to be safe haven, should also not be a sacrificial good, which the past history writes. The next move of the TCP in respect of cotton stock should be brought above board.

In din and bustle created to let world know exports products in Pakistan are bruised with the high cost of being duty bound the PSQCA has the right thing to suggest MoC to take policy measures to help improve competitiveness and protection levels in country’s industry. Pushing products in local or the world market by hook and crook is not one thing should engage the heart and soul of the exporters but the consumers showered praise is also something to be cared about.

Responding to Ministry of Commerce’s invited proposals for improving competitiveness and protection levels of the domestic industry and enhancing market access the PSQCA expressed the view that this step would improve competitiveness of local industry and produce export surplus which would contribute towards well being of the country, hardly ever thought of.

Indeed Pakistan faces many challenges in respect of market access, which are lamented and continued to be lamented but the cure is found only in subsidies, R&D, concessions etc and whatever is offered to rival exporters in appreciation of their huge forex earning and honest payment of all the due taxes and obligations.

So far world trade organisation has not showed its hammering but should we not expect if a deal – final deal has been struck. Child labour and sanitary and rulers are bound to hit hard for which preparation is a must to stay in the world markets. The pathetic side of the trade and exports are that government alone should manufacture and search for markets for smooth product supplies without facing more efficient rival exporters.

Unless honestly comes from within people to fight odds they see lurking around, rivals will continue to flourish and prosper. Without training and patronising local intelligent young men employing people, loitering on the periphery of the industrial areas, to do him tech jobs breakthrough against the fast moving rivals in exports is next to impossible.