Domestic cotton prices remain steady
March 22, 2013
DR ZAFAR HASSAN
Despite reported loss of almost three to four cents per pound over the past few days on the New York cotton futures market (ICE) for the frontal months, Pakistani fiber prices remain steady because of our relatively tighter fundamentals. There is also talk of correction on the New York futures market on news that both China and India may sell cotton from their available stocks to their spinners at lower rates.
Thus on Thursday domestic cotton prices were generally well held on the domestic cotton market. Seedcotton (Kapas/Phutti) prices remained unchanged and kept the higher level. Sindh seedcotton prices reportedly ranged from Rs 2,400 to Rs 3,000 pay 40 Kgs. on Thursday in a steady market. In the Punjab, the seedcotton prices were said to have ranged from Rs 2,400 to Rs 3,300 per 40 Kilogrammes. Lint prices in both Sindh and Punjab kept their high levels and reportedly ranged from Rs 5,800 to Rs 7,100 per maund (37.32 Kgs) according to the quality.
This season (August 2012-July 2013) in Pakistan may see an ex-gin output close to 13 million bales (155 Kgs) while the domestic mills need between 15 to 16 million bales of cotton. Mills would need to import between two and 2.5 million bales during the season.
According to media reports, the Federal Board of Revenue (FBR) has replaced zero-rating regime from the textile industry with two percent value added tax for the textile values chain, both for registered and unregistered persons. This development is expected to result in a smooth flow of goods in the textile industry and is thus a positive factor.
There were reports in the cotton market that sowing of the new crop (August 2013 — July 2014) had started in Pakistan. The Federal Cotton Committee is said to be proposing a production target of 14.1 million bales (170 Kgs) for the new season. Textile circles said that they have no problem in selling yarns and do not foresee any bearishness in this regard in the near future. Thus the obtaining situation on domestic cotton and yarn markets may be viewed positively.
Till the evening two ready cotton sales were reported. First, 600 bales of cotton from Fakirwali in Punjab reportedly sold at Rs 6,550 per maund (37.32 Kgs), while 1200 bales from Alipur were said to have been sold with some concessions at Rs 7.700 per maund in a fairly steady market.
On the economic and financial front, two reports attracted the spotlight although other news regarding unsatisfactory condition around the world was also received. Firstly, the boss of the United States Superbank, namely Ben Bernanke of the Federal Reserve, cautioned that although he saw a modicum of improvement in the US economy, it would take several more years before any real improvement would occur in the American economy. The other news concerned the distress seen in the Eurozone financial circles who fear that Cyprus would go bankrupt.
Thus we see that though America would extricate itself from its present economic misery, including unprecedented levels of continuing unemployment, it would indeed take a long time before full economic recovery is effected in the United States. The long time required for a wholesome economic recovery in the United States will be certainly painful and penurious.
The next in line looking for a bailout in the Eurozone is Cyprus. Early this week reports indicated that the International Monetary Fund in conjunction with the finance ministers of the Eurozone had cobbled up a programme to save Cyprus from bankruptcy. Later in the week, events started unravelling as some glitches appeared to be negatively affecting the 10 billion euros bailout deal. Since then, the financial fortunes of Cyprus are lying in a limbo.
Firstly, the 10 billion euros deal is substantially less than the 17 billion euros actually required. More over, the deal also reportedly stipulates levy of upto 9.9 percent one – time tax on bank deposits. Further more, the other major development concerns the Cyprian plea to Russia asking for a new loan which has upset the powers that be in the European Union. This occurred when the parliament in Cyprus rejected that bailout terms put forward by the European Union.
Following these developments, the government in Cyprus have shut the country’s banks for another five days which sent shivers in the banking circles. There is more to these events and occurrences than what meets the eyes. There are geopolitical considerations such as the fears of the western powers regarding increasing influence of Russia on the Cyprian banks where a whole lot of the Russia’s money is said to lying in deposit.
There are more angles to the Cyprian imbroglio than meets the eye. As a result, the equity markets around the world reacted nervously at midweek worried not only about the Cyprian conundrum, but the adverse effect it is having all over the Eurozone. In the United States itself, the city of Detroit in Michigan is said to have lost its solvency and thus sought urgent aid to help it avoid its bankruptcy. The Indian economy is also losing steam. Thus it appears difficult to envisage a wholesome global economic recovery in the foreseeable future. Source Business Recorder
Published: Zarai Media Team