Cotton business slow in a steady market


Though cotton prices are generally holding on to the previous levels, business is slow in a steady market.

A crucial cricket match being played between Pakistan and Bangladesh today (Thursday) and a public holiday declared on Friday March 2 3, 2012 as Pakistan Day, have reduced business activity.

With extended holidays, market may resume full business on next Monday.

It is now projected that Pakistan may produce a record crop of 14.7 to 14.8 million domestic size bales this season (August 2011 July 2012).

From this output, Pakistani mills may consume anywhere from 14 to 14.5 million bales while the exporters are likely to ship anywhere from one to 1.5 million bales.

Imports by the domestic mills may range between half a million to one million local size bales.

Sowing for the next crop (August 2012 July 2013) had started in some areas of Sindh and Punjab but cold weather has delayed lint resowing which may resume soon.

According to the Pakistan Cotton Ginner’s Association (PCGA) seedcotton (Kapas / Phutti) arrivals report for the current season (August 2011 July 2012), total arrivals till the fifteenth of March, 2012 were 14,548,845 lint-equivalent bales of domestic size against last year’s arrivals of 11,574,917 bales for the same period, or an increase of 25.69 percent.

From this quantity, the mills have lifted 12,778,389 bales.

Exporters have picked up 999,909 bales while the ginners are still carrying an unsold quantity of 770,547 bales with them in both pressed and loose form.

Interruptions of power and gas supply to several industrial areas have again irritated the domestic textile industry which is trying to cope with this difficult situation but the disturbance is reported to be serious.

Yarn markets both locally and abroad are said to be sluggish but some enquiries are being received from the Far East.

Local demand for yarns may improve because pf availability of comparatively cheaper domestic cotton.

Lint rates in Sindh reportedly ranged from Rs 4,000 to Rs 5,400 per maund (37.32 kgs) according to the quality, while cotton prices in the Punjab are said to be extending from Rs 3,600 to Rs 5,600 per maund in a steady but quiet market.

On the New York cotton futures market (ICE) on Wednesday, there was marginal improvement in the benchmark May, 2012 contract which settled at 88.31 cents per pound, but several traders feel that the market is top-heavy.

First of all, the global economic and financial condition remains glaringly dicey if not disturbing.

Secondly, there are ample cotton supplies which are available for the foreseeable future.

With social imbalances emerging in China which could easily turn chaotic, both the United States and Europe could suffer immeasurably.

Thus cotton trade and indus try could also remain under pressure.

On the global economic and financial front, this week started with an ebullient note on the global equity markets with plenty of almost interest-free money on the tap viz.

ample cheap cash being doled out by the America n, British and European central banks.

However, now a relatively newer problem is plaguing the global economy, namely the economic downturn in China.

With the Greek default having been shunted forward to be tackled at a later time, the economic contraction for the fifth month in a row in China has become a cause of serious concern for the global economic health.

Factory output in China is very disappointing being a corollary to the ailing United States and the Eurozone economies, excepting Germany where the economic condition continues to be steady and stable a remarkable exception.

No doubt that the global economic slowdown is harming the Chinese economy which problem is quite wide and varied throughout China.

Severe downturn in property prices in China and also accumulation of bad assets has started pestering the Chinese economy in no uncertain terms.

Now the definitely declining Chinese economy has become a major global issue of concern.

Besides being in the economic doldrums, China is now plunging into large unemployment problems which have started social unrest there.

Chinese downturn has started having negative effects on the Asian economies.

Rural workers returning from urban areas to their homes are workless with no social security or unemployment safety network.

Initially, the depressed economies of the United States and Europe were hoping for an upturn following better performance of China and some of the BRIC countries.

Now that China, India, Thailand have also started performing negatively, the global economy bears the portents of more and elongated misery before a turn around is forthcoming.

India’s economic boom is said to have lost steam and its body politic is said to be seething in corruption.

The United Kingdom’s economy is still flagging.

The British Finance Minister George Osborne presented the annual budget on last Wednesday promising the Government’s determination towards unwavering commitment to deal with record debts.

The British budget has been called a reforming budget that seeks to repair the disastrous model of economic growth that created those debts.

On last Wednesday, the European share prices fell flat on reports that Untied States home sales fell unexpectedly in February which news coincided with the British budget carrying negative news throughout the global equity markets.

If these news were not bad enough, rise in crude oil prices, copper prices and Portugal falling deeper into an economic quagmire a la Greece has created a megamess in the global economic and financial system.