Pakistan: Cotton market displays tight condition

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Since the beginning of this week, the cotton market has presented a tight posture with both seedcotton (Kapas/Phutti) and lint prices having moved up sizably. Low grade seedcotton prices in Sindh have gone up by Rs 300 to Rs 400 per 40 Kgs and even better grade seedcotton prices have appreciated by Rs 200 to Rs 300 per 40 Kilogrammes. In the Punjab, Seedcotton prices are said to have improved by Rs 200 to Rs 300 per 40 Kilogrammes.

Lint prices in lower Sindh have increased by Rs 300 per maund (37.32 Kgs) while prices of better grades have reportedly gone up by Rs 200 per maund since early this week. In the Punjab, lint prices are said to have gone up by Rs 150 to Rs 200 per maund, according to the quality. Two days public holidays have been announced for the 14th and 15th of November 2013, on account of Muharram. Therefore, business activity in any practical sense may start from the next Monday viz. 18th November 2013.

Prices of seedcotton from Sindh were said to have ranged from Rs 2100 to Rs 3050 per 40 Kgs according to the quality, while the seedcotton prices in Punjab reportedly extended from Rs 2900 to Rs 3250 per 40 Kilogrammes. Lint prices in Sindh are said to have ranged from Rs 5000 to Rs 6700 per maund (37.32 Kgs), according to the quality. In the Punjab, lint prices reportedly prevailed from Rs 6600 to Rs 6800 per maund in a tight market. Cotton output this season (August 2013-July 2014) may range from 12.5 to 13 million bales (of about 155 Kgs), while the mills would be needing anywhere from 15 to 15.5 million bales. Exporters may ship out about half a million bales while the mills may import between 1.5 and two million bales.

In the evening, it was reported that seedcotton prices were becoming tighter. This may signal a possible increase in the prices of lint cotton accordingly. The lower quality of seedcotton in Sindh which was earlier damaged due to bad weather is a disturbing phenomenon. In the meantime, export goods valued at more than Dollars 300 millions are stuck and stock piled at port and factory areas due to striking transport operators who are demanding the implementation of their demands to which the government had agreed earlier.

Business has also declined due to the transport strike. Cotton sales of 1000 bales was reported from Yazman Mandi in Punjab at Rs 6675 per maund (37.32 Kgs), while sales of 1000 bales each from Ahmadpur East and Rahimyar Khan at Rs 6700 per maund was also reported in the evening. On the global economic and financial front, the same desolate and desultory condition continued to appear in most countries around the world. Each week, the sundry investors and assessors of the global economy take heart by scattered news here and there to presume that wholesome economic progress will now start taking place, only to be disappointed later on. This week is no different.

As far as the United States is concerned, the entire world keeps a close watch in its economic performance being the largest economy in the world. Moreover, each and every move or pronouncement of the Federal Reserve Bank is closely monitored to seek some solace or guidance regarding its financial measures to prop up the American economy. However, the inaction and incoherence of the Federal Reserve in providing any positive steps to boost the American economy continue to be seen negatively.

Lack of any action by the Federal Reserve to provide a clear and coherent policy to confront the essential stagnation and waywardness of the American economy has become clearly manifest. It may be added that the apparent indecisiveness of the Federal Reserve appears to be progressing from a mysterious to a mystical posture. The interregnum of changing of the Chief at the Federal Reserve from Ben Bernanke to Janet Yellen early in 2014 also appears to be a drag on clear cut policies of the Federal Reserve.

On their own the Eurozone, Japan, China, India, Brazil and others continue to face economic slackness without any substantial improvement. It has been reported again that besides minor growths in Germany and France, the Eurozone slipped again last month and any recovery in the northern economies remains lopsided. In this regard, former Chairman of the Federal Reserve Alan Greenspan has been reported to have said that “I don’t believe that a common economic and currency area can function in the long term if it is made up of 17 countries with 17 different social systems”.

Thus the equity prices in several countries started falling since last Tuesday and continued to wobble later in the week in most instances. Though many scrip still remain close to record high levels, but the basic confidence in any global recovery in the near future remains elusive. Disappointment also set in as observers could not find any solid commitment at the recently held Chinese Economic reform plan held by the Plenum of the Communist Party, even though China has promised a large role for free market.

Thus at midweek US stocks futures prices were reported to have become sluggish as the Federal Reserve bosses seemed to be divided on its plans to resuscitate the economy. Likewise, equity prices in Europe, China, India, Hong Kong, Australia, Taiwan, Tokyo were all down or flat as investors appeared to be in a pensive mood while strikes and protests against austerity measures continued to be held in Greece and Portugal. Record high unemployment, particularly in the youth category, is playing havoc with the current generation in the Eurozone.

Source: Brecorder

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