Sizeable sales on cotton market
DR ZAFAR HASSAN
November 02, 2012: Thursday saw fair volume of turnover on the cotton market where price sentiment was described as being held on a steady basis. Reports said that yarn exports had increased by 29 percent compared to previous year which incited spinners to delve into cotton purchases. Some offtake also increased due to pending purchases following the recently concluded Eid-ul-Azha holidays.
Reports were rife that ginners were holding cotton but this news could not be corroborated. Ginners were said to be reasoning that at the current seedcotton (Kapas / Phutti) prices, they lack parity on their lint sales. However, recent reports also purport that size of the current crop (2012-2013) was lower than the earlier anticipation of 15 million bales because there was flower shedding after the rains in some areas several weeks ago.
Generally speaking, seedcotton (Kapas / Phutti) prices in Sindh ranged from Rs 2,500 to Rs 2,700 per 40 kgs and seedcotton prices in Punjab were the same. Lint prices in Sindh ranged from Rs 5,500 / 5,550 to Rs 5,800 per maund (37.32 kgs) on Thursday, while in the Punjab the lint prices reportedly ranged from Rs 5,600 / Rs 5,650 to Rs 5,800 per maund.
In Sindh 400 bales of cotton each from Tando Adam and Shahdadpur were said to have been sold at Rs 5,550 per maund (37.32 kgs). Earlier, 400 bales from Mirpurkhas and 200 bales from Sanghar sold at Rs 5,500 per maund. About 1,000 bales from Khairpur district sold at Rs 5,800 per maund.
In the Punjab, 1400 bales of cotton from Bahawalnagar and 200 bales from Chishtian sold at Rs 5,750 per maund (37.32 kgs), 200 bales from Burewalla sold at Rs 5,700 per maund, 200 bales from Harunabad sold at Rs 5,775 per maund while 200 bales from Harunabad and 400 bales from Mianwali sold at Rs 5,800 per maund.
Because most of the domestic mills are making handsome profits in their yarn and fabric exports, buying of cotton is likely to remain a regular feature. Even if a pressure on prices builds up with increased arrivals of seedcotton, mills purchases could keep the prices at a steady level as they need to cover their requirements against their export sales of yarns and fabrics into the forward months.
Should power and gas supply be augmented properly, mills are likely to increase their production capacities. In fact, due to increased demand for coarser counts of yarns, a lot of cotton is required to spin the desired quantities. Therefore, we may perceive a generally normal functioning of the cotton trade and textile industry for the foreseeable future. Hopefully, mills will also pay increased attention to produce more sophisticated and value-added goods.
On the global economic and financial front, most plans and proposals to rectify the eurozone economic mess remain ineffective. If anything, conditions are getting grim day by day. The Greek economic and financial situation has all the portents of a tragic ending as it is said that Greece has run out of money. It has now been declared that the Greek recession is worse than what was imagined earlier. In the mean time, the European Union has stated that no deal has been announced yet which could finalise the Greek austerity measures. All the proposed economic measures for Greece remain dangling in the air. Indeed the Greek finance minister Yaanis Stournaras has declared that the economy is destined to shrink by 4.5 percent next year while the country lies flat under a mountain of debt. Greece will run out of money in a few days and it is said to need Euros 31 billion soon.
This situation in Greece, coupled by the intolerable economic and financial mess in Spain, Portugal, Italy and also to a substantial extent in France, bodes ill for the economic future of the Eurozone. If the worsening situation of Germany, however small at this time, is added to the table of hopelessly debt-laden countries aforesaid, no hope appears on the horizon which speaks well for Europe at large. If struggling Europe fails to stand up on its own two feet soon, then God help the United States, China, India, Brazil and the Pacific nations, viz the world at large.
The denouncement of the world economic demise may be triggered by the eurozone and then the chain reaction could envelop the entire globe. Other reasons for a pessimistic economic outlook include the burgeoning national debt of Japan. Besides, the escalating political row over the islands claimed both by Japan and China is hurting Japanese investment and exports to China. Recession is looming large in Japan as exports have slumped in a large way despite near zero interest rate prevailing in Japan. In the eurozone at large, the economic crisis starting with bank failures and large scale unemployment has turned into a systemic malady as the deepening recession has entered into the entire body politic of the zone.
In Spain, bad loans have reached a record level while unemployment keeps going up. Unemployment in Spanish youth is disturbingly high. These severe and punishing socio-economic conditions in Spain keep escalating while reports pour in that the European Union leaders keep exchanging ideas and giving decisions which have hitherto failed to resuscitate the continental economy. While this goes on, the increase in Spain’s borrowing costs following a ratings downgrade have further dampened any hope of early economic recovery. In the mean time, business confidence in Germany continues to fall.
In addition these widespread economic woes around the world, now hurricane Sandy has lashed the eastern seaboard in the United States inflicting death and destruction for at least two days early this week. Though business in US Northeast is limping back to normalcy, but the megastorm Sandy has inflicted massive damage to property, infrastructure, rails, road and air travel which were totally paralysed or grounded during the prevalence of the monstrous storm. Estimates of loss of property range from 20 billion dollars or more which will hit the insurance industry strongly. The loss following the visit of the mammoth hurricane Sandy is likely to escalate sizeably and further depress the fragile global economic condition.