Cotton crop is heading towards maturity with about 13 percent of the crop already reached ginneries by the middle of this month. Last week, some cotton areas in Punjab and Sindh provinces received light to normal rains, which only disrupted the flow of crop temporarily.
However, crop is progressing well and a crop of 11.5 and 12.0 million 170-Kg bales may be harvested this season on present condition although Cotlook estimates put our crop at 1.92 million tons equivalent to 11.3 million 170-Kg bales almost equal to last year's crop. Total arrivals of seed-cotton in ginneries by the 15th of this month are reported equivalent of 1.43 million local weight bales which is about 30 percent more than the arrivals of same period last year.
Lint cotton prices in local market during the last week showed some weakness and prices decreased from the level of RS 4,200 per 37.324 Kg ex-gin to RS 3.850 from Lower Sindh station for delivery on 10th October. Generally, the prices remained subdued reportedly on increased arrivals and slack buying interest in the market. However, by the end of last week, prices improved to the level of RS 4,000 per maund of 37.324 Kg (=US Cents 63.75/lb ex-gin) on increased buying. Quality-wise, Sanghar district is on top both in grade and staple length but Mic values are on higher side. Lint quality in Punjab is reported down as grade of cotton has been adversely effected by rains producing yellow spots in lint cotton. The weakness of Rupee against US dollar which has touched the highest level of RS 77.80 per US dollar in interbank dealing, is helping export potentiality.
Last month, our cotton exports were sold at good prices even up to US Cents 74-75 / lb F.O.B Karachi. Market sources estimate total export sales of some 100,000 bales mostly to Bangladeshi, Indonesian and Indian buyers. Local spinners are fairly active in lint buying local lint cotton adding their cotton inventories. Quotations for US cotton 31-36-G-5-28 Gpt around US Cents 72.0 / lb CFR Karachi.
The US administration has taken initiatives to fight back the recession in commodity and financial sectors by pumping huge amount running in billions of US dollar and thus action has reposed confidence to investors and the prices of oil, gold, commodities including cotton have turned upward. Crude oil prices have appreciated to USD 103 from the recent lowest of 88 last week. One has to watch the development minutely whether this increase in prices is short-lived or has strong base to further go up.
US economy appears to be in doldrums. By the end of the last year and start of this year, slow down process in US economy started which further deteriorated resulting in economic recession. Prices of crude oil, grains, soybeans, cotton, other commodities and housing / real estate sectors which almost touched very high marks, stated coming down. In other words, melting of ice of the Himalayan size US economy stated with problems in housing sector when prices of real-estate started coming down followed by wholesale prices of commodities. Resultantly, losses of investment banks started accumulating leading to declaration of bankruptcy by some of the highly reputed investment banks. Other related sector of general insurance lost heavily.
According to a report by a senior officer of World Bank, investment banks heavily lost money but commercial banks were not seriously effected by the economic recession. Some economist consider this US economic depression more dangerous than the economic depression of 1930s. The US government is reported to have planned to pump some US $800 billions to save its economy from disaster. The US economy being the engine of world economies having more than 25 percent share in world GDP, would directly and indirectly effect the world economies.
The economic recession has jolted down large financial and insurance institutions which has resulted in bankruptcy of four reputed large banks. US administration has saved AIG company by pumping some USD 85 billions. The initiative of the US administration to fight back the recession and bankruptcy of the financial and other institutions by pumping some US 700 billions to bail out the financial and mortgage sectors by buying mortgaged assets.
This prompt action of the US administration has reposed confidence among the investors and prices of commodities, grains, crude oil and gold have turn up-ward and time will tell whether this upward turn in prices proves short-lived or the prices maintain steady to bullish trend in future.
Last Sunday's heavy explosion of 800-Kg in the capital city of Islamabad almost destroying a Five-Star hotel, killing more than 55 innocent people and injuring more than 100 people, would have very bad effect on country's economy, foreign investments, Pakistan's image abroad, confidence of its people, travel, hotel and tourist industries and political stability of the country. Pakistan's foreign exchange reserves which were highest at over USD 16 billions have decreased to below USD 9 billions. Comparatively small countries have very large reserves: Taiwan USD 282 billions, South Korea 243 billions, Brazil 205 billions, Singapore 175, Hong Kong 137, Japan 997 and top one China USD 1889 billions.
Pakistan is USD 143.6 billions equal to 0.26 percent of the world GDP, while GDPs of some important countries are: USA 13,811 billions ( 25.4 percent of the world), Japan 4,376 billions, Germany 3,297 billions, China PRC 3,280 billions, Brazil 1,314 billions, India 1,170 billions, South Korea 970 billions, Indonesia 433 billions and Saudi Arabia 382 billions. The country's weak economy cannot afford to face such terrorist activities. The political situation has not as yet improved while economic performance including exports, law and order situation and economic indicators are deteriorating causing great hardships for the people of Pakistan.
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