Cotton prices held steady

Ginners became tight sellers at midweek as lint prices continued to be held steadily due to improving textile condition. Due to announcement of preferential import policy of Pakistani textiles into the European Union announced recently, better power supply in the country and maintained activity of exporters, raw cotton prices are clearly steady and stable. Therefore, with reported improvement in the working of the textile industry, lint price have became notably on the mend.
Several mills are sold into the future as far as their yarns and some textile items are concerned. In view of this positive situation, some of the ginners have become reluctant sellers. Particularly, the price of higher class of cottons is relatively tighter as a large quantity of the current crop (August 2011-July 2012) has been picked up by the mills regularly. Because the New York cotton futures prices have mostly been range-bound for the previous many weeks and the possibility that growers in several origins may sow alternate crop for better gains for the next season (2012-2013), the price undertone of cotton remains somewhat positive. Trade sources added that unless some negative news is received from the macroeconomic front, cotton prices should remain essentially stable and steady.
It is now presumed that Pakistan cotton crop may yield around a record 14.5 million domestic size bales this season (August 2011-July 2012) from which the mills may use up between 14 million to 14.25 million bales. Exports could range from one million to 1.25 million bales while imports could be about one million bales.
According to one assessment, seedcotton equivalent to about 14 million or more lint-equivalent bales of domestic size bales may be received from the current season by the middle of this month. Therefore, the cotton and textile sector seem to be achieving a type of normalcy and regularity in their running.
On Thursday, seedcotton (Kapas/Phutti) prices in Sindh reportedly ranged from Rs 1,800 to Rs 2,400 per 40 Kgs., while in the Punjab they were said to have ranged from Rs 2,200 to Rs 2,700 per 40 Kilogrammes. Lint prices in Sindh were said to have ranged higher between Rs 4,400 to Rs 5,800 per maund (37.32 Kgs), while in the Punjab they ranged from Rs 5,200 to Rs 6,000 per maund (37.32 Kgs). Business was restrained till late in the afternoon due to tight posture of the ginners.
The Pakistan Cotton Ginners Association (PCGA) has released its seedcoton (Kapas/Phutti) arrivals report for the current season (2011-2012) detailing seedcotton arrivals of the 13,615,327 lint equivalent bales of domestic size for the entire country till the 1st February 2012 against last year's (2010-2011) figure of 11,104,511 bales, or an increase of 22.61 percent. From this quantity, the domestic textile mills have lifted 11,609,578 bales. Exporters have picked up 724,090 bales. The ginners thus themselves retain an unsold quantity of 1,281,659 bales in both pressed and loose form.
On the global economic and financial front, all eyes were on Greece whether it will manage to reduce its public expenditure, increase taxes and cut pension payments to become eligible for another bailout. The coalition government of Greece was seen making last minute hectic efforts to achieve political approval for its cost-cutting programme to achieve the confidence of the European Central Bank, the International Monetary Fund (IMF) and sundry other creditors and lenders and keep the country financially intact.
Otherwise, hell would break loose because Greece is presently the epicenter of the European economic faultiness which could not only disturb any remaining equilibrium in the European economic and financial set-up, the ripples of such a horrific eventuality would easily effect the United States, which in turn would influence the economic condition of China, the Far East and Latin America adversely.
The economic failure of Greece would be horrendous. It would wreck the European banking system and also its global trade in most other goods and commodities. Therefore, last ditch efforts were being made by the big bosses of the Eurozone to protect and prevent the ejection of Greece from the zone which could be catastrophic globally.
While the Greek drama continued to be played with its own inherent difficulties and problems, the agony on the global economic situation did not abate. The equity markets which exhibited their enthusiasm during the beginning of the week sobered down later on and at best offered a mixed performance.
The rising inflation in China gave anxious moments to the analysts. Inflation in China was said to be the highest in three months. Fears of unemployment in the UK and the Eurozone continues to haunt the managers of their economies. Therefore, it was anticipated that quantitative easing would be continued by the central banks for the foreseeable future.
However, in order to contain further collapse and closures of banks and businesses by lending more money to them, it would breed unacceptable inflation. Moreover, analysts remain doubtful about the so-called improvement in the United States housing sector and also in Europe and elsewhere.
In such a situation full of suspense and economic uncertainty, investors, or whatever remains of them, are again worried. Basically, we may record that many if not most governments around the world are pressed under mountain-loads of sovereign debts. Many banks, particularly the European banks, remain under-capitalised.
All that the economic and financial markets need is a trigger of some unfortunate news to precipitate the downfall of a global economic catastrophe the likes of which the world has never seen before. A painful default of Greece could be one such event.