Cotton prices reported early in the day appeared to follow the overnight levels. New crop (2012-2013) seedcotton (kapas / phutti) prices in Sindh were Rs 2,900 to Rs 3,000 per 40 kgs, while in the Punjab they were said to have ranged from Rs 2,700 to Rs 2,800 per 40 kilogrammes.
Before the afternoon, lint prices of current crop in Sindh were obtaining in the range of Rs 5,000 to Rs 6,200 per maund (37.32 kgs) and in the Punjab they reportedly ranged from Rs 5,500 to Rs 6,500 per maund, according to the quality. However, lint prices later caved in and conceded from Rs 200 to Rs 300 per maund (37.32 kgs) with possibility of more erosion in values.
Deteriorating political climate in Pakistan after removal of prime minister Yousuf Raza Gilani a couple of days ago due to contempt of the Supreme Court and reported decline of about ten cents a pound of cotton on the New York futures market were also cited as reasons for the drop in domestic cotton prices.
Two lots of cotton from the new season (August 2012 - July 2013) were said to have been pressed by a ginner in Harunabad in Punjab who was reportedly demanding Rs 7,000 for a maund (37.32 kgs) but the buyers abstained to buy this high-priced cotton. Yarn business was also reported to have been slow due to civil commotion and disturbances in Karachi. Otherwise, it is said that over the previous months mills have sold most of their spinning output and are hardly carrying any yarn stocks.
Thus local cotton prices were subdued on Thursday. Traders said in Karachi that global fibre prices were also generally weak. Due to irrigation water shortage in Pakistan, new crop (August 2012 - July 2013) may be less than projected earlier. Now the total cotton output for the new crop is projected between 13.5 million to 14.5 million domestic size bales on an ex-gin basis, while the domestic mills consumption may range from fourteen million (14,000,000) to fifteen million (15,000,000) bales. Exports may be estimated at one million bales while imports may range from one to 1.5 million (1,500,000) domestic size bales.
In the evening, it was all quiet on the cotton front. In fact, few if any buyers appeared on the market, Mills sources said that Indian cotton has also become cheaper. A major influence in calming down cotton prices seems to have been the ending of the New York cotton futures July 2012 (ICE) contract which had tightened over the past few weeks because some speculator was said to be demanding specific delivery where as numerous mills around the world had purchased unfixed cotton and had to fix it on the July 2012 basis before its delivery date or expiry.
On the global economic and financial front, the week started on a note of optimism with observers pinning their hopes on the elections in Greece and the G-20 meetings of the leaders in Mexico. Both events soon lost their fizz before the end of the week. Greece is facing its biggest crisis since the past forty years as bailouts by the European Union and the International Monetary Fund (IMF) have both failed to remedy the deep and depressing financial condition because nothing workable or operable has been prescribed for its economy.
Now an improbable coalition of the New Democracy Party and the Socialist PASOK has been banded together under Antonio Samaras as prime minister, a Harvard educated economist from a rich family, to present a plea to the euro zone partners to soften the terms of the bailout which has angered the Greek people and created much suffering for them. The recent Greek elections are unlikely to bring political or economic stability as the newly elected political parties are a discredited lot who have alternated in forming governments over the past forty years but have failed to bring about any positive or tangible results for Greece. The new leaders want to renegotiate the much despised 130 billion euros rescue plan created and formulated by the European Union and the IMF. The new Greek government is unlikely to be able to rescue Greece from its formidable financial difficulty.
As Greece and in turn the eurozone are unlikely to resuscitate from the deep financial malady any time in the foreseeable future, they are hurtling their financial contagion to the eurozone and in turn the United States of America. As the United States has a symbiotic relationship with the eurozone, the US is also sinking deeper into an economic catastrophe.
According to a report regarding a business survey released by Business Roundtable, chief executives in America carry a dim view of the economy in the second quarter of 2012 and doubt that there will be any increase in sales or employment. In other news, Japan's exports to the US rose sharply but with high crude oil costs widened the trade deficit in Japan. Debt-ridden United Kingdom saw some respite as it floated "Operation Twist" to exchange short term borrowings (say of two years' maturity) for longer term borrowings reduce extending till ten years or so. Such tactics only shift the day of reckoning and do not create any goods, employment or provide any payouts.
This week the Federal Reserve of the United States cut its estimates for the growth of the US economy and also confirmed that unemployment is much more than estimated a couple of months ago. While the Greek economy is completely broken, the borrowing costs are soaring in Spain. Fresh fears have arisen that Chinese economy is certainly slowing down. It is not only that Europe is off the cliff, the US economy is also downward inclined. It is thus seen that it is not only the Eurozone or the USA, the Chinese, Indian, the Middle East and the Pacific economies are also falling downwards. Indeed the world economy at large is losing steam.
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