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Cotton market TCP induction amply justified by achievement

SHAFI AHMAD SYED

KARACHI: The role played so far by the TCP has amply justified its induction. As a result, local cotton prices reached a level during the week ended on Feb 26, 2000 that can ensure growers a fair margin of earning.

Niab opened its account at Rs 1851.25 and wound up higher at Rs 1937.50. K-68 started at Rs 2081.25 and closed at Rs 2167.50. MNH 93 commenced at Rs 2148.75 and closed higher at Rs 2206.25, with sales tax (ST).

WORLD SCENARIO

Fluctuations on the New York Cotton Exchange (NYCE) were sharp both ways. Futures showed bullish trend when session began on Wednesday.

The opening session saw sharp up surge. March was up by 1.71 cents to 58.80 and May was up 1.42 cents to 61.17 cents a pound. But that was all, as the rest of the sessions saw futures going down, cumulative fall being more or less equal to the first day's gains. Traders awaited NYCE spec/hedge report eagerly. It, however, sent spec and trade futures down. Traders later said weekly release of spec/hedge report showed large commodity fund traders increased their net long position to 44.1 percent from 37.1 percent. They hoped fundamentally US weekly cotton export were expected to stay high.

Besides, they said, the market was also influenced by other outside markets. They pointed out that stock market was down. So were gold, silver and grain markets. The market, however, was still embracing low consumption number and USDA baseline projection for the cotton industry.

The closing session saw May contract sharply down by 1.48 cents to 58.85 cents a pound, in the trading range 60.80 and 58.80 cents a pound spot March was down 1.27 cents to 56.68 cents a pound.

TCP DOES IT

TCP has proved it can turn the corner. Selling abroad around 150,000, bales at 41/48 cents a pound has stunned all. Even those having reservations nod in affirmative that they have been proved wrong. TCP also stabilised prices on local markets.

The latest deals of 75,000 bales at around 47/48 cents a pound in Pak currency amount to Rs 2000 per maund ensuring a gain of Rs 400 per maund or so. Thus encouraged, TCP in tends to export over half-a-million bales.

COLOSSAL TASK

The Chief Executive's announcement that the government is planning to help growers and would buy all cotton in the next season, has baffled traders. Whatever is in his mind has put in spin the minds of the people "having deep insight about cotton".

The questions arise whether the government would start ginning also, or it would engage ginners to do the job for it. The job is colossal.

Some ginners said recently they were already calculating the cost if they are asked to do the job. Since the policy on cotton is due by mid-March, the government must have been receiving suggestions. The brokers body secretary Naseem Usman thinks the best way would be to announce support price of phutti which should be strictly implemented.

MISUSE OF FACILITY

A meeting of textile associations and government in Islamabad recently warned that exports of value-added products may get severe set back. They said closure of powerloom units was imminent due to high cost of yarn in local markets.

This is not the first time that voice has been raised against yarn prices hurting exports. The bedwear association and CTA have been in the forefront in fighting odds that block exports of value-added goods.

What the meeting yielded result was not clear. But the agenda was clear that yarn exports would have been discussed as a great loss to country because exports fetching more foreign exchange were not smoothly done.

Prior to the Islamabad meeting powerloom owners had warned that if yarn continued to sell that high units may close down and exports of bedsheets, ready-made garments, cloth textile made ups and knitwear would suffer. They had said misuse off export refinance facility stopped and yarn exports be regulated. Authorities may look into the mother and take such decisions as to benefit the economy and the country.

POLYESTER FIBRE

The value-added sector has expressed fear that the rise in polyester staple fibre by Rs 4 per kg would increase yarn prices by 100 percent. Thus would have adverse effect on exports of value-added products.

If the price of the polyester fibre goes up by Rs 4 per kg, the semi-dull staple fibre will be Rs 60, bright fibre will be Rs 62 and for bright violated will be Rs 64 per kg.

Value-added products manufacturers fear that yarn prices, cotton blended yarn prices and cloth prices will rise.

According to exporters, it is high time that things are made easy for exports, the execution of which is vital.

TAIL PIECE: A delegation comprising two members is on its way to Geneva to file case against the US government for restricting imports of Pak yarn. The case is likely to be taken up by dispute settlement board of the World Trade Organisation (WTO). We pray for its success.

It is learnt that this is the second bid by Pakistan, as US had declined to lift ban on Pakistani yarn imports. The US urged the board to review it recommendations to withdraw the ban.

Under the circumstances Pak exporters hope that sympathy of the organisation is with Pakistan.