Cotton situation remains humdrum

Cotton trading became tardy since the beginning of this week due to various reasons of both domestic and external import. Year end demanding closing adjustments with the banks, recent rainfalls in the cotton belt in both Sindh and Punjab giving rise to fears of possible loss of lint quality, deterioration in the condition of the textile industry with special reference to paucity of gas and power supply and last but not least the continuing global financial and economic fiasco have all added up to put cotton and textile business on a cautious footing.
To begin with, considerable rains have fallen in a sizeable stretch of the cotton belt in both Sindh and Punjab giving rise to reports that atleast some cotton will suffer in quality due to moisture intake and moist weather with overcast skies in several cotton stations. Cotton bales pressed prior to the recent rains would gain comparative preference with the buyers. Some cotton areas like Sukkhur division and Hyderabad in Sindh and Khanpur, Rahimyar Khan and Sadiqabad in Punjab received good amount of rains.
Furthermore, the chairman of the All Pakistan Textile Mills Association (Aptma), Tariq Mehmood, accompanied by ex-chairman Shafqat Elahi and Punjab zone chairman Engineer Akber Sheikh recently addressed a press conference to say that almost a third of the textile industry had become idle due to short or in some cases total lack of gas supply and also shortage of power in Punjab and north west frontier province. Such a condition should certainly be considered a serious impediment in sustaining the proper functioning of the Pakistan textile industry.
Due to approaching end of the calendar year, banks are asking their clients to adjust their accounts within the closing period which is creating added hardships for the textile industry. moreover, due to a spate of holidays including the birthday of Quaid-e-Azam and Christmas on the 25th of December 2008 and the approaching new year on the 1st of January 2009, the business sentiment has been dampened drastically.
Added to these predicaments, the depression in the domestic equities market coupled with continuing deteriorating law and order situation are further undermining the business confidence. Political wranglings in Punjab province, tensions in the business capital of Karachi and continuing conflagrations of the army with the Talibans in the north-western region of Pakistan are also having a negative impact on the economy at large.
The grand edifice of the global economic infrastructure has burst at the seams denoting its lopsided and iniquitous creation coupled with grand larcenies committed by numerous of its operators. The denouement of this monumental drama is laden with portents of unprecedented misery for mankind.
No doubt a weak united states dollar and some short covering have pushed up the prices on the New York cotton futures (ICE) market over the last couple of days, but the cotton fundamentals remain basically weak in the global recessionary context. Thus the impression of a modicum of steadiness in the cotton futures prices can easily be ascribed to the incredibility low value of united states dollar in relation to the Japanese yen and some other hard currencies.
On last Wednesday, the March 2009 delivery on the New York cotton futures market settled at US cents 45.96 per pound (up by 182 points), the May 2009 delivery ended the day at US cents 46.51 per pound (up by 162 points), while the July 2009 delivery closed for the session at US cents 47.66 per pound (up by 176 points).
The latest seedcotton (kapas/phutti) arrivals report issued by the Pakistan Cotton Ginners Association (PCGA) shows a nation-wide receipt of 9,092,048 lint equivalent domestic size bales up to the 15th of December 2008 against last year's arrivals of 8,349,831 bales for the same period, or an increase of 8.89 percent for this year's crop (2008-2009) compared to the pervious session. If we add another three million bales expected to arrive till the remainder of this season, this year's total output may still touch 12 million domestic size bales.
Brokers could not report any ready business till the evening of Thursday but some sales are likely to be record later in the night. The general price idea of seedcotton (kapas/phutti) was said to have ranged from Rs 1,400 to Rs 1,525 per 40 kgs in both Sindh and Punjab. Lint prices in both Sindh and Punjab were said to have ranged from Rs 2,700 to Rs 2,900 per maund (37.32 kgs) in a listless market. The tone of cotton prices remained weak for the day.
The Trading Corporation of Pakistan (TCP) has reportedly procured more than 100,000 bales from the ginners till now and could become more active after the holidays. However, according to some observers, a number of ginners are prepared to sell their cotton to the mills with some discount and thus avoid any hassles that may be involved in offering their stocks to the state procuring agency.
We may conclude by saying that the cotton and textile industry of Pakistan is linked to the economic well-being of the global economy, which kept floundering this week due to more dismal news emanating from India, China, Brazil and Russia in addition to the continuing dismal and dreary news being received from the United States of America where the automobile industry is in the limelight having been left in the lurch by the United States senate which rejected a bailout plan for the industry this week. Plans for its future recovery have now been deferred by the US Congress till the beginning of next year (2009). We may recall that the textile industry supplies millions of metres of upholstery cloth to the automobile industry. Another blow to the fast floundering economic health of America is manifest by the huge losses reported by the investment bank Morgan Stanley this week. Such news are having a domino effect not only on the United States economy, but are also seriously impairing the viability of other sectors of the global economy. Commodities like cotton and industries like textile are bound to suffer from the contagion of global economic malady.