The cotton market appeared somewhat quiet in the morning which condition continued later in the day. Being by far the cheapest cotton in the medium and shorter staple category compared to any other origin, mills may lift more quantities gradually to capitalise on this favourable situation.
Most if not many of the textile units over a broad spectrum of the industry are enjoying much better and more favourable working conditions so that regular lifting of lint may continue over the forthcoming weeks.
However, textile industry in Pakistan remains fearful that gas supplies, a critical input for their efficient and profitable functioning, may be reduced as is usually done in the winter season. However, in this regard the federal minister of textile Rana Farooq told a large gathering of representatives of all the important components of the textile industry in Islamabad last Wednesday that textile units in the country would be accorded priority in the supply of gas due to its importance to the national economy.
Ready cotton market rumours on last Wednesday that export of lint may be banned to conserve cotton for the domestic textile industry were ignored for the time being in the market. It seems that government is cognizant of the fact that the best way to keep the market operative efficiently is the leave it to its own forces of supply and demand with duty free import and export of the fibre as always advocated by the Karachi Cotton Association (KCA).
There is also a continuous clamour coming various end users of yarn and the different downstream users of yarn who are pressing the government to either restrict or ban its export, specially to China where large quantities are being shipped. Powerloom weavers from Faisalabad, Karachi and elsewhere in the country are criticizing the spinners for their increase in yarn prices due to its shipment to China where the projected output of cotton has been decreased this season (2009-2010).
In this connection, both the vice chairman of the former Pakistan Textile Exporters Association (PTEA) Rehan Naseem Bharara and chairman of All Pakistan Cotton Powerlooms Association (APCPA) Ikhlaq Ahmed are said to have said recently in Faisalabad that government should look at the gravity of the situation where extra exports of yarn and its hoarding have created a shortage in the market where many thousands of powerlooms in the country have closed down.
In the mean time, the Farmers Associates of Pakistan (FAP) expressed their serious disapproval to any proposal to ban the export of raw cotton when they met earlier this week (Tuesday) in Lahore as it would be damaging to the interest of the growers. FAP members criticised the textile industry for preaching free trade on the one hand, and on the other hand they call for government intervention to stop the export of cotton. FAP members also noticed that the government had not yet announced the support price of seedcotton (kapas/phutti) which they say should be about Rs 2,000 per 40 kgs in line with the international ready lint and cotton future prices.
Cotton traders are estimating that seedcotton (kapas/phutti) from the current season (2009-2010) equivalent to about 7.2 million domestic size bales will have arrived into the ginneries throughout Pakistan by the 1st of November 2009.
From this quantity which has been almost entirely sold out, the domestic textile mills are estimated to have bought 6,700,000 bales while about 500,000 bales have been purchased by the exporters. Exporters are expected to be selling more than one million domestic size bales in the foreign market during the current season of which a sizeable chunk is likely to go to Bangladesh.
In the evening, there was no holding on to the cotton and most ginners were waiting to sell their lint if willing buyers appeared on the market. Yield prospects for cotton remain excellent in Sindh and also quite normal in Punjab at this point of evaluation.
Reports from the cotton market appearing in the evening showed that the ginners were willing to sell their cotton at current rates but the buying was relatively moderate. With the approaching weekend, it is likely that any active buying of cotton may shift to next week.
Under these circumstances, the price idea of seedcotton (kapas/phutti) from both Sindh and Punjab ranged from Rs 1,800 to Rs 1,875 per 40 kilogrammes. Lint cotton was being quoted from Rs 3,675 to Rs 3,775 per maund (37.32 kgs) in Sindh, while in the Punjab it was also being offered from Rs 3,675 to Rs 3,775 per maund on Thursday according to the quality.
Actual sales of lint cotton in Sindh included 400 bales from Sanghar at Rs 3,675 per maund (37.32 kgs), while 200 bales from Sarari and 1,000 bales each from Shahdadpur and Tando Adam were said to have been sold at Rs 3,700 per maund each.
Till late afternoon, 400 bales from Gojra in Punjab reportedly sold at Rs 3,750 per maund. On the global economic and financial front, dire and disappointing news continued to pour in. While the United Kingdom has again regressed into a recession, new home sales in the United States again slipped down.
The equity markets also went down around most parts of the world following bad business news from the United States of America. Many analysts are starting to wonder if the great expectations the investors had from the equity markets in the USA, Europe and elsewhere were ill-founded.
With consumer confidence also having gone down in the USA where many people are more inclined to save for the rainy day, pessimists seem to be having the upper hand at this juncture. Facing the longest recession since the records started being kept in the UK, authorities there have decided to place curbs on bank bonuses and other lavish expenditures which the bankers continue to gift to themselves.
The current talk around the globe is that of the end of the American Century, the introduction of a new global reserve currency as being proposed by China, Russia, India and several Far East countries, and the increased participation of more countries around the world in the formulation of global financial and economic policies and their execution.
Citizens from several countries are against of using more bailout packages by their governments as most of the money from such schemes is deemed to be going to those bankers and big bosses of the corporate world who have brought us to grief in the first place. These operators of the Brave New World appeared to have failed to pull out the global economy at large barring few expectations like China, India, Singapore or Brazil. Therefore, many economists contend that the world economy at large is poised for another recession.
On the home front, a large bomb exploded in a busy market in Peshawar on last Wednesday where mostly children and women go for their shopping. It was the most disastrous bombing of a public place in Pakistan this year on the very day US Secretary of State Hillary Clinton was visiting Islamabad. Nobody has claimed the responsibility but such events keep Pakistani law and order and security situation very vulnerable.
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