Cotton prices suffered extended losses on the domestic market in both seedcotton (Kapas/Phutti) and lint categories due to both local and global factors. Locally, despite some recent improvement in textile business following the reduction in lint prices, today textile circles are reporting dull business both in yarns and fabrics. Ample local supply of lint is also putting a lid on any increase in lint prices.
Globally, reports about the decline in cotton consumption, little or no further purchase by the Chinese; India failing to sell its surplus cotton supply, and last not least the serious decline in confidence pertaining to eurozone financial affairs and the ill health of its economy are paramount factors accentuating the rapid decline in the global economy. With reports of about thirty per cent reduction in Bangladesh textile orders, South Asian textile business has also generally slowed down.
While the New York cotton futures (ICE) prices for the impending December, 2011 contract having touched ninety cents per pound, the subsequent contracts on the board for this season (2011-2012) and the subsequent season (2012-2013) are also mostly hovering around this range. With the grim global economic situation and no dearth of fiber supply, cotton prices should concede some more cents per pound in the foreseeable future. Extended holiday (Thanksgiving on Thursday) and holiday mood in the United States is likely to push active business activity to some time next week.
Local seedcotton (kapas/Phutti) prices suffered a loss from Rs 200 to Rs 300 per 40 Kgs since one week. Thus, seedcotton prices were said to have ranged in Sindh from Rs 2,000 to Rs 2,300 per 40 Kgs, while in the Punjab they were reported to have ranged from Rs 2,000 to Rs 2,500 per 40 Kilogrammes. Lint prices fell by Rs 400 to Rs 500 per maund (37.32 Kgs) within one week's time. Cotton prices from Sindh reportedly ranged from Rs 3,800 to Rs 5,100 per maund (37.32 Kgs) in a lackluster market, while in the Punjab they were said to have ranged from Rs 4,900 to Rs 5,400 per maund according to the quality.
Cotton output in Pakistan for the current season (August 2011-July 2012) is expected to range from 13 million (13,000,000) to 14 million (14,000,000) domestic size bales on an ex-gin basis, while the domestic mills may consume any where from 13.5 million (13,500,000) to 14 million (14,000,000) bales. Exports may range from half a million (500,000) to one million (1,000,000) bales while imports could range from one million (1,000,000) to 1.5 million (1,500,000) bales.
In actual cotton sales in Sindh on Thursday, 200 bales of cotton from Ghotki in upper Sindh were sold at Rs 5,000 per maund (37.32 Kgs). In the Punjab, 200 bales each from Chichawatni, Burewalla and Bahawalnagar were all reportedly sold at Rs 5050 per maund while 800 bales from Khanewal sold at Rs 5,150 per maund. Till late afternoon, most of the mills were not coming forward to buy cotton and were said to have essentially withdrawn from the market.
Six cotton brokers of Karachi Cotton Association, all belonging to the Naseem Usman panel, were elected to the Brokers Advisory Committee for the year 2011-12. Their names are Naseem Usman, Abdul Aziz Abdullah, Abdul Jalil Khan, Girdhari Lal Assudomal, Muhammad Taufiq Haroon and Taqi Abbas.
On the global economic and financial front, the condition deteriorated to its new nadir being the worst decline in economic performance since the end of 2008. Moreover, we are witnessing the stresses and strains on the eurozone financial system as never before. Furthermore, as we now deem the world as a globalised economy and social entity, the ill effects have now clearly travelled from Europe to the shores of America and Canada, China, the Russian Republic, Latin America, Australia, the Middle East and last not least South Asia on this unfortunate planet.
Besides the frightening financial debts which have been piled up by the component countries of the eurozone, one and all in varying degrees, the United States public debt has swollen by about another couple of trillion dollars to nearly fifteen trillion dollars. Equity markets around the world have become more turbulent and volatile. Manifold multiplication of economic and financial problems have raised their ugly head on most corners of the world as we are all hopelessly linked together in an inextricable relationship, in which we are trying to find a sheet anchor to stabilise our moorings.
In more specific terms, even the once sacrosanct German and the Chinese economies are shrinking. While the German economy was contracting, a shocker came to its people, and indeed the world at large, when it was announced that a German bond auction failed on last Wednesday as it was feared that the eurozone debt could conceivably strike the heart of Europe while its front line leaders Frau Angela Merkel and France's president Sarkozy were ostensibly poles apart on their respective views on how to keep the eurozone finances from being shattered.
Reports from Berlin further added that only about two thirds of German bonds (Bund), or 3.9 billion euros, received bids against a total offer of six billion euros. This again amply shows that investors around the world believe that "cash is king." Thus, the general appearance of the equity markets around the world shows an unprecedented nervousness and volatility
By the middle of this week, most share markets around the world sank in unison. If Germany is contracting, and the eurozone numbers are negative and the Chinese are suffering from a thirty-two month low performance, everything in the economic sphere appears universally downbeat. Canada will also suffer because Europe is its largest market. Asia is also bracing for the ill effects of eurozone economies as America also fears that the European sickness will soon travel to the United States, which is already facing its home-grown economic adversity. As it is, the Americans are wary of spending their earnings on consumer goods.
Reports from India are no different. It was reported this week that India's leading share index of blue chip companies tumbled to a two year low level at midweek on growing concerns by the investors pertaining to high inflation, slowdown in growth and political wrangling and deadlock between the leading parties. Last but not least, crude oil prices slumped at midweek as traders feared that downswing manufacturing activity in top-consuming China and fresh bickering in the eurozone political arena by the heavyweights Germany and France about its sovereign debt crisis could become unmanageable.
Comments
Comments are closed.