May 17, 2013
DR ZAFAR HASSAN
In a move symptomatic of reduced volume of cotton trading on Thursday, the Karachi Cotton Association (KCA) has cut the price of grade three cotton by Rs 50 per maund (37.32 Kgs) and determined it at Rs 6,400 per maund. This step by the KCA also reflects the quiet condition on the cotton market with low volume of reported business.
Even yarn prices are said to be on the weaker side due to reduced demand from China. Because of the decreased interest of buying of coarser counts of yarn by China from Pakistan, several mills are said to have shifted their yarn production to higher counts of yarns which require less cotton.
Actually, brokers added from Karachi that there is a lack of activity in cotton business, even on the global market. Locally speaking, ginners are still said to be carrying 300,000 to 350,000 bales unsold cotton from the outgoing crop (August 2012 – July 2013).
New cotton crop in Pakistan (August 2013 – July 2014) may be a little late in coming but is said to be alright till now. Pakistan could reap 13 to 14 million domestic size bales from the new crop while the mills are projected to need 15 to 16 million domestic size bales next year (2013-2014).
In Sindh, the cotton rates are reported to be extending from Rs 5,800 to Rs 6,200 per maund (37.32 KG), while in the Punjab they are said to range from Rs 6,000 to Rs 6,500 per maund, according to the quality. There were other reports that some of the ginners were not selling their stocks of current cotton crop (2012-2013) and were demanding higher rates. We may thus characterise the current status of the cotton market to range from quiet to steady, depending on one’s perception.
Last Saturday (11 May 2013) Pakistan held its elections for the national and provincial assemblies for the next five years with nearly eight million voters eligible to cast their votes. Nearly sixty percent voters are said to have exercised their voting right.
Barring some areas like Karachi, Peshawar, Quetta and sections of Lahore city, the elections went very well. The elections on the whole were conducted very fairly with youth and women folk attending in large numbers. Nawaz Sharif’s Muslim Leage N won decisive victory with Imran Khan of Tehrik-i-Insaf making remarkable inroads into the polity of Pakistan. The ruling Pakistan Peoples Party Parliamentarians were decisively defeated. Great credit goes to Justie (R) Fakhruddin G. Ebrahim, the Chief Election Commissioner, for conducting the polls successfully to a large extent. The whole occasion was momentous which has instilled a new vigor and vitality into the people of Pakistan which will also contribute to strengthen its unity
On the global economic and financial front, most leading shares indices around the globe are treading record territory. Indices of shares prices like the Dow Jones or Standard and Poor’s have surpassed all-time high levels and remain poised to vault to higher territory.
Most analysts are ascribing this scintillating performance at the sundry bourses to the cheap flooding of money by the central banks like the Federal Reserve in the USA or the European Central Bank. The Eurozone at large is passing through a recession since more than a year. France is now said to have again receded into a recession during the first quarter of 2013. Additionally, it may be recalled that France is going through a sixteen year high unemployment rate. There are immense chances that the economy in France will continue to stagnate throughout this year and possibly much beyond.
Despite all the hoopla at the American stock exchanges, we may do well to remember that according to a recent report by Reuters from Washington, the United States “factory output dropped in April and manufacturing activity in New York state contracted this month, a sign that slowing global demand is weighing on the economy.”
It was further reported that wholesale price in America its largest decline in three years. The United States cannot hope to singly improve its economic outlook when demand at home remains lukewarm, the Eurozone economy still stuck in a slough of despondency and the Chinese economic growth is going downwards.
The fear is that a powerful economic region like Eurozone is still stuck in chronic recession that refuses to allow any improvement. Austerity drive in the Eurozone is said to be a prime cause which is elongating the recession there. The Organisation of Economic Co-operation and Development (OECD) just said that a whopping 48.3 million people are out of work in the rich countries. Independent observers put the unemployed figure in the developed world at higher levels.
One may surmise that despite unprecedented pumping of taxpayers money into the market by the central bankers of the USA, the Eurozone, China and the United Kingdom, no tangible benefit is coming out of it. Actually, mostly weak consumer demand on both sides of the Atlantic coupled with weaker global demands of goods and products are keeping the world economy mostly in the doldrums. Business Recorder