Global rise in cotton prices following weather problems in India due to late monsoons and drought in United States effecting West Texas were recorded this week with frontal months on the New York cotton futures market (ICE) ranging higher from 76 to 78 cents per pound.
A spate of holidays during the rest of the month in Pakistan have also strengthened cotton prices this week. The 14th August, 2012 will be celebrated as the Independence Day in Pakistan, while other possible holidays include next Friday ( Juma-tul-Widdah) and Eid-ul-Fitr holidays said to fall on the 20th, 21st and the 22nd of August, 2012. As a result, transport availability will dwindle which carries cotton from the ginning factories to the mills. Many mills are therefore buying more cotton this week to tide over the forthcoming holiday period to keep their spindles humming.
Thus both seedcotton (Kapas/Phutti) and lint prices rose this week in Sindh as well as Punjab. Seedcotton prices in both Sindh and Punjab went up by Rs 50 to Rs 100 per 40 Kgs as per quality. Lint prices went up in both Sindh and Punjab by Rs 50 to Rs 150 per maund in a tight market.
Thus seedcotton prices in Sindh ranged from Rs 2,575 to Rs 2,650 per 40 Kgs, while in the Punjab they reportedly ranged from Rs 2,575 to Rs 2,675 per 40 Kilogrammes. Lint prices in Sindh reportedly ranged from Rs 5,775 to Rs 5,800 per maund (37.32 Kgs) on Thursday according to the quality, while in the Punjab they are said to have ranged higher from Rs 5,800 to Rs 5,900 per maund in a tight market. The quality of cotton from Sindh is said to be exceptionally good while the lint quality from Punjab is also quite good.
Now nearly 35,000 bales of cotton are being ginned daily throughout Pakistan. About 70 to 75 ginning factories are operative in Sindh pressing the current crop (August – 2012 – July 2013), while nearly 200 factories are already running in Punjab.
Ready sales of cotton have been brisk in recent weeks. On Thursday, 2,000 bales of cotton from Shahdadpur, Tando Adam, Hyderabad and Sanghar in Sindh are said to have been sold at Rs 5,800 per maund (37.32 Kgs), while in the Punjab 400 bales from Bahawalpur and 800 bales from Khanewal both reportedly sold at Rs 5,900 per maund. Current cotton crop (August 2012-July 2013) is shaping up well and may reach 15 million domestic size bales. Yarn prices both in Pakistan and abroad are said to be good. Over the past many months, both Pakistan and India have been shipping large quantities of yarns to China.
Global cotton prices have gone up in sympathy with grain prices like soybean and corn along with other grains in the commodity complex. Global cotton prices have also risen due to speculative buying on support to banks and promises by the government authorities to do more to salvage the Eurozone and the American economies. Presently, mills are not necessarily providing the wherewithal to the recent rise in cotton prices as there is no shortage of cotton as seen today.
On the global economic and financial front, this week saw central bankers like the Federal Reserve in the United States and the European Central Bank giving positive assurances and increasing signals that they would take meaningful measures to strengthen some of the leading commercial banks with added support to stabilise their tottering status. However, mired in rigging while fixing the daily rates like LIBOR banks including Barclays, H.B.S.C. and Standard Chartered have been variously charged with money laundering and for violating sanctions against Iran, besides also dealing with drug cartels.
With a weak and discredited banking sector in United States, the United Kingdom, France, Greece, Spain and even Germany, it is very dicey and doubtful if pumping more money directly into the large banks in different countries would somehow stabilise the faltering global economic growth.
While Great Britain is finding it difficult to get out of a recession, now it appears that France is headed towards a double-dip recession. While the Bank of England has cut it projection for the growth rate to zero this year, the dark clouds of economic stagnation in the Eurozone are casting an unmistakably scary spell on the global financial crisis which is clearly deeper and more desperate than was being thought previously. The European shares fell on reports of extremely poor economic data. Thus the European problems have multiplied instead of being sorted out and carry the potential to intensify.
While Brazil is not doing too well, a cascade of frightening economic reports from India clearly clarify that the country is fast sinking into negative territory. Thus Indian shares fell flat at midweek in tandem with the European shares where Eurozone economic performance was feared to be declining further.
Therefore, despite promising advice from the central bankers in America and Europe, the global economic data continues to remain patently disappointing. Rating agencies and the central banks are continuing to project poor economic data for the forthcoming months, while some of them see the global economic and financial problems extending over the forthcoming years.
In Italy we again witness economic contraction in the second quarter as the much hallowed austerity measures are reducing factory activity and also the loss of consumer confidence. Thus tens of millions of people are suffering in Europe fearing approach of an economic Armageddon.
Contradictions and stark contrast between the proposed American, European and British economic policies to avert further global economic breakdown continue to persist. Now the fearful prospect of Germany also joining China facing a clear decline in its economy should send shudders in the spine of the global business, banking and economic bosses.
It is being reported that fresh data from Germany shows that it is also succumbing into a crisis mode and may also fall back into a recession. The economic and financial contagion finally seems to have also infected Germany.