Slow business on cotton market
DR ZAFAR HASSAN
In this connection, the Agriculture Development Commissioner, Dr Khalid Abdullah, has reportedly said that short spells of rain are not harmful for the cotton crop. He added that applying proper management practices would result in a healthy output of the crop (August 2012 – July 2013). He continued, however, to say that stagnant water would be harmful for the crop.
Thus there was less buying of cotton due to the current rains imparting weakness to fibre values. Spinners feared that the rains may affect the lint quality. However, the rains till now may increase the cotton output. Moisture in some lots of cotton was said to be as high as 13 or 14 percent which restrained spinners from buying hurriedly. Thus business was said to be sparse on Thursday.
Cotton values on the global markets were also weakish and there were said to be ample stocks and supplies available at different origins. Spinners in Pakistan are generally said to be satisfied with their performance. Seedcotton (Kapas / Phtti) prices in Sindh were said to have ranged from Rs 2200 to Rs 2500 per 40 Kgs., while in the Punjab they also reportedly ranged from Rs 2200 to Rs 2500 per 40 Kilogrammes. The rain affected seedcotton, as well as cottonseed (Binola / Kakra) are selling at a discount.
Sporadic sales of cotton were reported on Thursday evening because of the uncertainty of the extent or continuation of the ongoing monsoon spell on the health of ready cotton. However, till now the effect of the rains was said to be favourable. Sale of 400 bales of cotton each from Mirpurkhas and Hyderabad in Sindh were both said to have materialised at Rs 5650 per maund (37.32 Kgs).
It may thus be presently surmised that the current crop in Pakistan (2012-2013) may yield an output ranging between 14 and 15 million bales of cotton of domestic size on an ex-gin basis. From this cotton, mills may consume between 14 and 14.5 million bales while the exporters may ship between half a million to one million bales. Domestic mills may need to import between one to 1.5 million bales during the ongoing season.
On the global economic and financial front, equity investors keep the ball rolling and continue to harbour hopes that sooner or later the economies in the USA, Europe, China, India and the Far East will take an upturn. However, the ground realities continue to disappoint. In fact more depressing news continues to be received from all the four corners of the globe.
Of more recent interest has been the depressing economic and financial condition in hitherto sacrosant economies like China, Germany or India. Various plans and proposals continue to be discussed and mooted by such institutions as the Federal Reserve in America and the European Central Bank, the G-20 grouping and the likes thereof. However, nothing concrete or palpable has emerged from their deliberations till now. Each day brings more disappointing news regarding the worsening economic condition around the globe.
Of prime worry these days is the definite decline of the Chinese economy. Lately, it has been reported that the Chinese economy continues to weaken due to the slump in manufacturing activity in August, 2012 sliding for the ninth month in a row. This situation is a cause of serious worry because Chinese economy is the second largest in the world and it was hoped that it would provide a much desired fillip to other economies around the world. This is a serious development because the decline in the economy of China is extraordinary. News has been released in Beijing that investment in China from abroad was also going down. The second quarter economic decline in China has been described as its worst performance in three years.
On previous Wednesday, equities in Europe tottered following the reported losses in Asia as investors were said to have adopted a cautious mode. All hopes around the world continued to be focused on possible action by the central banks in Europe and America to ease money supply or provide some succor to the wobbly economies of America and the Eurozone, which in turn could radiate optimism to rest of the world.
However, at present the Eurozone is perceived to have sunk into a recession again because the economic decay of the peripheral economies of southern Europe have made inroads into the German economy. Now it is feared in business quarters that the downturn in the eurozone is deeper than envisaged earlier.
Just last week US Federal Reserve Bank Chairman Ben Bernanke stated that the American economy is “far from satisfactory”. Civil war in Syria continues to cause concern and social unrest continues to smolder in the rest of the Middle East. Moreover, America is fighting a war in Afghanistan which it does not want to fight. At least five trillion dollars of public money has been reportedly spent by America to strengthen its economic sickness and to finance for flung wars around the world. This has caused a drain in its financial condition.