Cotton futures prices rebound

Traders said in Karachi that New York cotton futures (ICE) prices gained nearly 14 to 15 cents per pound since the beginning of this week, but then conceded about three cents per pound in the evening. Last recording on Thursday evening Pakistan time showed July 2011 contract at about US cents 156.41 per pound.
Traders added that system-wide increase in commodity prices, fixation of price for contracts finalized on "on call" basis and decrease of available stocks which may be tendered against purchases of cotton on the futures market as reasons for the price increase.
Local cotton prices appeared somewhat stable on Thursday but the basic condition of the cotton and textile markets remains easy. In fact, recently even some large textile units had cut their spinning output following lack of gas supply for three days a week on which they were producing cheaper power for their mills.
Reported draught in China, lingering fears of crop health following heat in Texas over the past weeks and now floods in Mississippi have emboldened the bulls so that the bears have retreated for the time being. Even some local ginners who were offering new crop (August 2011-July 2012) to the spinners a week or two ago are no more sellers. Sellers fear that there are two many fluctuations in the market to take any positions for the new crop.
Therefore, though transactions in cotton had not transpired till the evening at higher prices but the ginners were asking for increased prices. Thus a modicum of stirring had appeared in the market and a few enquiries for cotton were also evident, but upto now no basic change has occurred in the market situation. The reason for lack of any optimism in cotton and textile trades appears to be the continuing lack of offtake in yarns, fabrics and finished textile goods yarns, over a wide spectrum of their activities.
Reports have also emerged on the textile markets that a leading importer of textile goods from America has cancelled a third of his orders from Pakistan. The only cheerful note in our market pertains to the news that the European Union may allow limited trade concessions to Pakistan which list of goods also includes textile products. It has been reported that the European Parliament had voted earlier this month in support of the package announced last year following devastating floods in sizeable parts of central and southern Pakistan.
Due to unprecedented returns reaped by the growers during the outgoing season (August 2010-July 2011) cotton sowing during the forthcoming season (2011-2012) is expected to be extensive. While the outgoing season (2010-2011) yielded a low output of almost 11.7 million domestic size bales, the output in Pakistan during the forthcoming season (2011-2012) may range higher between 13.5 million to 14 million bales, subject to clement weather.
In recent years, Sindh province has increased its output steadily Therefore, it is assumed that from an expected output of 13.5 million to 14 million bales of cotton during the new season (2011-2012), about 4 million bales may be produced in Sindh and the balance mainly in Punjab.
An estimated 125,000 to 150,000 bales of unsold cotton from the current crop remain unsold in the market. Though the ginners are asking for Rs 200 to Rs 300 per maund (37.32 Kgs) more for this cotton, but generally the lint prices are said to be steady though unchanged.
The nominal price idea for the current crop seedcotton (Kapas/Phutti) remained in the range of Rs 2,500 to Rs 3,000 per 40 kilograms with only meager quantities left unsold in the market. Lint prices were continued to be quoted between Rs 7,500 to Rs 8,500 per maund (37.32 Kgs) even though a few ginners were asking for more. Later at night, 200 bales of cotton from Pir Mahal in Punjab sold at Rs 7,900 per maund (37.32 Kgs), 400 bales from Ahmadpur East sold at Rs 8,350 per maund while 500 bales from Rahimyar Khan were said to have been sold at Rs 8,500 per maund.
On the international economic and financial front, things got no better this week. Demonstrators continued to protest in Madrid against the Spanish government's economic mismanagement, alleged corruption and the misguided financial policies. The protestors refused to accept the austerity measures imposed by the government and criticised the widespread unemployment in the country.
Though most equity markets were up in Europe and USA but the Nikkei index became weak following the third recession now into which Japan has entered since the last ten years following the natural disasters of the earth quake, the tsunami and the consequent atomic power plant meltdown at Fukushima.
In the United States of America, government borrowing came close to the statutory limit of US Dollars 14.3 trillions which cannot be exceeded. The government thus moved quickly to cut down expenditure here and there to remain within the legal limits of borrowing allowed by legislation.
Besides sluggish housing sales in the USA, shares of Hewlett Packard slumped due to lower sales. Some people fear that a bubble in the technology sector is forming which may burst and take down other sectors of the economy with it. European Union is also preparing a programme to bailout Portugal which remains in financial doldrums. Also, International Monetary Funds (IMF) chief Dominique Strauss-Kahn who was facing sexual assault charges has resigned clearing the way for the confirmation of the Fund's regular workings.
These developments point to continuation of economic and financial difficulties which continue to pose serious threat to an early rehabilitation of the global socio-economic and political wellbeing. However, unemployment and widespread political unrest remain the biggest factors impeding any early return of normality around the world.