With extended Eid-ul-Fitr holidays behind us and approaching weekend ahead of us, both domestic mills as well as the exporters are showing increasing interest in purchasing cotton. Therefore, despite the earlier impression that we would witness a holiday hangover for the remainder of the current week, cotton market is showing a steady to firm disposition with both the exporters and the mills expressing keen and regular interest in buying lint from the current crop (2009-2010).
A marked and meritable improvement in the Pakistani textile sector is helping keep domestic lint prices on a steady footing. Good turnover in cotton transactions remains a notable feature of the cotton market. Prices of cotton are also said to be on a stable footing due to an oversold position reportedly created by most of the ginners. Therefore with a new vigour and viability having returned to the textile sector over a wide range of its products, the entire cotton economy including the textile industry again seems to have moved into happier times.
With a better macroeconomic balance having being achieved in the overall economy of Pakistan coupled with the beginning of improvement of sundry social and economic problems, there is relatively increasing confidence in the business circles. The seedcotton (kapas/phutti) prices in Sindh reportedly ranged from Rs 1,700 to Rs 1,725 per 40 kgs, while in the Punjab they were said to have ranged between Rs 1,725 to Rs 1,800 per 40 kgs on Thursday.
Lint prices in Sindh reportedly ranged from Rs 3,475 to Rs 3,525 per maund (37.32 kgs), while in the Punjab they are said to have ranged from Rs 3,575 to Rs 3,600 per maund. Due to escalating interest of the mills added by the abiding purchasing interest of the exporters, cotton prices are likely to remain in firm territory for the time being.
The latest trade estimates of the current crop (2009-2010) range from 11.8 million to 12.5 million domestic size bales on an ex-gin basis. Sindh crop appears to be progressing well and the final yield from the province is being estimated anywhere from 3.2 million to 3.3 million bales, while the Punjab province is anticipated to produce between 8.5 million to 9 million bales.
Against this output scenario, mills consumption in Pakistan is being projected at a minimum of 14.5 million domestic size bales which could conceivably rise to fifteen million bales. The main focus of the Pakistani mills is in buying from the domestic crop and have reportedly purchased about 1.7 million bales till now.
The exporters are said to have sold nearly 300,000 bales from this season (2009-2010) against which they are reported to have covered 250,000 bales from the market upto now. This configuration of cotton sales and purchases points to the possibility that Pakistan will have to import anywhere between two million to 2.5 million bales (170 kgs) later in the season to meet the deficit.
As per the present situation, import attention will mostly be on Indian cotton and later on there could also be interest to import American styles. Mills sources have said that they are willing to consider import of Shankar-6 from India at around USC 58 per pound on C and F Karachi basis. While the cotton quality from Sindh from the beginning of this season (2009-2010) has been generally good, recent arrivals are showing increased micromere values upto five or more.
Though the Punjab quality of lint had earlier suffered from some grade and staple problems in several stations, but now its quality is showing improvement. Under this scenario, we expect increased arrivals of cotton during the incoming months which are expected to reach their peak with a daily arrival figure of around 100,000 bales in the months of November and December, 2009.
In actual sales reported on Thursday, 1,200 bales of cotton from Mirpurkhas in Sindh reportedly sold at Rs 3,475 per maund (37.32 kgs), 1,000 bales from Shahdadpur sold at Rs 3,460 per maund, 1,000 bales from Sanghar and 1,200 bales from Hyderabad sold at Rs 3,500 per maund each, while 2,000 bales from Tando Adam and 5,000 bales from Shahdadpur both sold at Rs 3,500 / Rs 3,525 per maund. Punjab sales figures were not available till the afternoon.
On the foreign financial and economic front, while the equity markets keep showing an abiding tenacity, the economic news and markers do not display an equivalent robustness. The G-20 countries were meeting on Thursday to continue their efforts not only to forestall any further economic downturn, but to seek a quick path to recovery. However, the leaders of the G-20 countries were often diametrically opposed to some crucial issues.
First of all, the freedom the USA and UK wish to continue granting to their bankers to avail untold billions as bonuses and bilk the public at large has strong opponents in France, Germany and elsewhere. The other unstoppable misery concerns the continually rising rate of unemployment around the world which could cause socio-economic disaster for decades to come.
The third important factor relates to the fear that trade sanctions may be clamped by the leading economic powers such as the imposition of import tax on Chinese tyres by the United States of America. Other unsettled global economic issues relate to the macroeconomic imbalance around the world which is creating large social and political problems around the globe.
There are inklings that the leaders at the G-20 meeting currently in session at Pittsburgh, Pensylvania in the USA are proposing the prospect to reorient and reshape the global economic order to a balance form. Though a worthy aim and cause, it is unlikely that the great economic giants of G-7 or G-8 are likely share their wealth and opportunities with the poorer countries and enable them to conduct a respectable and decent living.
It seems that the leading economic countries of the world have been living an existence of exploitation, mostly beyond their means in the preceding three or four decades, a life style of extreme indulgence which they cannot afford any more. No wonder that millions of workers around the world are opposing the bank bonus culture and similar practices of greed and opulence.
Be that as it may, cotton prices on the ICE futures markets kept moving up during the previous weeks despite lack of positive fundamentals. However, the one year low recorded by the United States Dollar against the Euro remains a credible reason for American cotton prices to remain perched at higher planes. Fear of bad weather in Texas also gave energy to cotton prices.
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