Seedcotton prices in Pakistan have gone up by Rs 100 to Rs 150 per 40 Kgs, while lint prices have made similar gains ie Rs 100/Rs 150 per maund (37.32 Kgs) in a tight market. Over the last two or three weeks time, lint prices have gone up by about Rs 700 per maund.
Reported drop in United States cotton output estimates due to drought in Southwest, particularly Texas, during the current season (2011-12), weaker dollar and speculative funds buying in the futures market are said to be the prime reasons for the upward drive in cotton prices.
In the domestic market, the hullabaloo created around the prospects of lifting or otherwise of cotton by the Trading Corporation of Pakistan (TCP) has initiated considerable increase in cotton prices since last month. While the ginners have been active sine the past several weeks to instigate the government to induct the TCP to buy cotton from the market to support the cotton prices, the Karachi Cotton Association (KCA) and the All Pakistan Textile Mills Association (APTMA) believe in an entirely free cotton trade without any restriction or imposition of import or export taxes. Even otherwise as the bulk of the crop has moved out of the hands of the grower, the KCA and APTMA see no role for the TCP.
Thus seedcotton (Kapas/Phutti) prices on Thursday ranged from Rs 1,800 to Rs 2,350 per 40 Kgs in Sindh, while in the Punjab they ranged from Rs 2,000 to Rs 2,750 per 40 Kilogrammes. Lint prices in Sindh are said to have ranged from Rs 4,500 to Rs 5,300 per maund (37.32 Kgs), while in the Punjab they are said to have ranged from Rs 5,200 to Rs 5,700 per maund in a very stable and steady market.
The PCGA released its fortnightly seedcotton arrivals figures for the period up to the 1st of January, 2012 for the current crop (August 2011-July 2012) where in it has reported total arrivals at 12,032,170 domestic size lint equivalent bales, an increase of 17.5 precent over the previous year for the same period from which the mills are said to have lifted 9,817,894 bales. Exporters are said to have purchased 518,011 bales while the ginners have a leftover quantity of 1,696,265 unsold bales in both pressed and loose form.
With China being reportedly a buyer for both cotton and yarns from Pakistan being competitively cheap, prices of both lint and yarns have improved considerably in our market. However, with the shortage of power and particularly suspension of gas supply to the industry, millowners are protesting countrywide for resumption of their gas entitlements.
It is now anticipated that Pakistan could probably produce upto 14 million bales of domestic size on an ex-gin basis during the current season against an estimated mills consumption ranging from 13.5 to 14 million bales. Exporters may ship between half a million to one million bales this season (2011-2012), while the domestic mills may import one to 1.5 million bales for their spinning.
Ready cotton sales on Thursday included 400 bales of cotton from Mirpurkhas in Sindh at Rs 4,500 per maund (37.32 Kgs), 400 bales from Khanpur in Punjab at Rs 5,200 per maund, 200 bales from Bayhawalnagar at Rs 5,250 per maund, 1,000 bales each from Khanewal and Sadiqabad at Rs 5,600 per maund and 400 bales from Shujabad at Rs 5,700 per maund.
On the global economic and financial front, the New Year (2012) started on a cheerful note when equity markets in Asia moved up on reports that manufacturing activity in India, China and Australia were on the rise in last December (2011). European markets also got the boost on reports of lower unemployment figure which was issued in Germany. Also, comments were received that construction activity rose in the United States being higher than anticipated earlier. Also, new orders for United States factory goods were said to have risen sharply in November, but business spending on capital goods has become lukewarm.
The cheer on account of the positive start during the first week of the new calendar year (2012) faded by mid week as a slew of negative news again started to dampen the global economic outlook. To begin with, the recalcitrant Greek economy remained rudderless and its financial woes continued to haunt its fellow members of the Eurozone. To wit, the Greek prime minister has just announced that Greece is likely to default on its repayment during the first quarter of 2012.
The Shanghai Composite Index closed one percent lower on negative news from Europe. United States also took the cue from deteriorating banking conditions in Europe as its stocks prices have started sliding as fears about the euro are re-emerging, wiping off the earlier gains. Thus following the short bounce witnessed at the beginning of the New Year, equities in Europe have resumed their downward journey. The positive data arising out of better economic condition reported on both sides of the Atlantic has been erased due to the continuing debt problems of Europe which have again undermined the worth of the euro. Reports said earlier that private sector activity in the Eurozone turned lower for the fourth consecutive month in December.
With these economic signs and signals, one can hardly hope that Europe with not again enter into a recession. The issue of continuing struggle and difficulties of European banks became manifest when the Italian bank Uni Credit SpA reportedly launched a 7.5 billion euro (Dollars 9.8 billion) rights issue at a massive discount on last Wednesday.
As a consequence of the these developments, Britain's leading share index FTSE veered lower on Wednesday following sharp gains during the early part of this week. Equities in the UK are said to have downslide following declines in performance by the retailers and the banks. In fact all the European shares fell on Wednesday following an earlier winning streak that barely lasted four days.
Thus with Chinese stocks commencing with a set back on Wednesday, Indian share prices also fell as investors worried about the incoming quarterly corporate results. Many Indian companies have had to face tightening credits regime instituted by the central bank, sluggish consumer spending and the fear that the global economy will hurt their business inevitably. Likewise, share prices also dipped in Seoul and Kuwait stock index slumped to a seven-year low level. Thus the global financial as well as economic condition continued to be bruised and battered with no early signs of rehabilitation. Happy New Year to all the readers.
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