On Wednesday, traders and cotton brokers closed shop early in the day due to a long weekend starting from Eid-ul-Fitr holidays declared by the government from 8th to the 10th of August 2013, adjoined by Sunday being weekly holiday. We may thus expect some business to resume on next Monday (12th August 2013), but then again 14th of August 2013 (next Wednesday) will be a closed holiday being Pakistan’s Independence Day.
Thus negligible business was said to have transpired on Wednesday. However, cotton and textile businesses have continued to do well except for the persisting power loadshedding and meager gas supplies, particularly in the Punjab, which hinder the textile industry from functioning at its full strength. In ready business, 200 bales of cotton from Shahdadpur and 400 bales from Sanghar in Sindh both reportedly sold at Rs 6650 per maund (37.32 Kgs).
Since the last few weeks, trade has projected that the current crop (August 2013 – July 2014) is expected to produce about 13.25 million bales of cotton on an ex-gin basis instead of 14.1 million bales which was the original production target. Such a situation arose due to lack of adequate water supply at sowing time.
Now attention has shifted to the recent monsoon rains which have started in most parts of the country, including the cotton belt. Significant amounts of rains have started to pour over the past few weeks in cotton areas of Pakistan. The ongoing monsoon is expected to continue in August and September 2013. Upto now the rains in Pakistan have been favourable to the cotton crop. Rains in August 2013 may also remain beneficial to the cotton crop. Weather pundits are forecasting excessive rains in Pakistan in September 2013. This has given rise to fears of possible damage to the standing cotton crop in Pakistan viz September 2013 rains. In case excessive rains do pour in September as forecast, the 2013-2014 cotton crop in Pakistan could be notably damaged.
As mentioned above, business was sparse in a thin market. Ginners were hesitant buyers of seedcotton (Kapas/Phutti) while the mills were also reluctant buyers lest the ongoing showers in the cotton belt may drench the fibre with undue moisture. However, brokers added that some pests like whitefly would be washed away decreasing incidences of cotton curl leaf virus in the fibre.
Seedcotton prices in Sindh on Wednesday reportedly ranged from Rs 2800 to Rs 3000 per 40 Kgs, according to the quality, while the prices of seedcotton in Punjab are said to have extended from Rs 2750 to Rs 3000 per 40 kilogrammes. Raw cotton prices in Sindh are said to have ranged from Rs 6,625 to Rs 6650 per maund (37.32 Kgs), according to the quality, while in the Punjab the lint prices are said to have extended from Rs 6550 to Rs 6600 per maund (37.32 Kgs). The tone of the market was basically quiet due to the long impending holidays.
On the global economic and financial front, after attaining very high levels, breaking records in some cases, equity prices started to slither on Wednesday as investors were gripped with fears that the United States Federal Reserve might soon be reducing some of its stimulus measures. What apparently triggered the negative market mood was said to be statements from the presidents of Chicago Federal Reserve and that of Atlanta Federal Reserve at midweek indicating decreasing of Federal Reserve measures.
The key point as reported in the media was that so-called quantitative easing could be tapered down as early as September 2013. If the quantitative easing (QE) which triggered the high rise in share values in the first place is brought down, the sundry investors have a plausible reason to anticipate a downward spiral in shares prices.
The rumblings of such an eventuality had already started being heard on last Tuesday when the Dow Jones Industrial average reportedly suffered its biggest point and percentage drop since last June. Reports added that the Asia markets followed suit at midweek with the Japanese Nikkei Index having conceded a loss of four percent. Leading indices in China are also said to have declined in tandem.
Wednesday also witnessed downwards trend in the morning. In this context, one may also recall that despite the marginal indicators that the United States economy is improving, the International Monetary Fund (IMF) has observed that the USA is still facing headwinds. Moreover, elsewhere in the world the stocks prices and economic sentiment also tuned became subdued.
Indian share prices slumped close to 2.5 percent on Tuesday because of apprehension that the record low value of the rupee nearly touching 62 units against the greenback could activate the Reserve Bank to control money supply in the country. Other shares which slipped on the downward path on Tuesday included equities in Australia, South Korea, Hong Kong, Taiwan, FTSE and sundry European shares, also including those in the emerging markets.
The upshot of these developments this week means that we better not expect any remarkable improvement in most of the economies around the world this calendar year and hardly better in 2014. The basic economic and financial problems in the Eurozone, the United States, the emerging markets or the developing world are presently showing a modicum of betterment but still remain in the doldrums.