Cotton prices continue to make gains

Cotton prices rose further this week and remained on a higher trajectory. Particularly, there is a shortage of good quality lint in the domestic market. Because the paucity of good grade cottons has increased in Sindh, spinners are making more purchases of Punjab styles. Exporters have also entered the market. Moreover, yarn prices continue to remain firm and remunerative inspiring mills to cover more of their cotton requirements. Thus at present lint prices continue to make more gains.
With cotton prices having gone up globally, including in India which is supplying considerable quantities to Pakistan, domestic prices have become tighter. Together with tighter yarn prices both globally and locally, cotton prices have gone up commensurately. Lint prices are also getting tighter because of depleting domestic stocks. Seedcotton (Kapas/Phutti) prices in the domestic market have gone up by Rs 100 to Rs 150 per 40 Kgs since one week. Thus in Sindh the seedcotton prices ranged higher from Rs 2,300 to Rs 2,950 per 40 Kgs on Thursday, while in the Punjab the seedcotton prices are said to have ranged higher from Rs 2400 to Rs 3100 per 40 Kgs in a strong market.
Lint prices have also gone up by about Rs 200 per maund (37.32 Kgs) since about one week. In Sindh, lint prices generally ranged from Rs 5,500 to Rs 6,600 per maund (37.22 Kgs), according to the quality. In the Punjab, lint prices have reportedly risen to range from Rs 5,600 to Rs 6,700 per maund on Thursday. The Karachi Cotton Association increased its ex-gin price by Rs 50 per maund for grade three cotton and fixed it at Rs 6,450 per maund.
Traders said in Karachi on Thursday that seedcotton (Kapas/Phutti) arrivals till the 1st of March, 2013 for the current season (August 2012 - July 2013) would be about 12.8 million domestic size lint-equivalent bales. From this quantity, the mills will have lifted about 11.5 million bales while the exporters may have picked up 300,000 bales. Thus the ginners are projected to hold a balance of nearly one million bales of unsold cotton on the 1st of March, 2013 both in pressed and loose form.
Cotton sales reported till the evening on Thursday comprised 1,000 bales from Khairpur in Sindh at Rs 6,650 per maund (37.32 Kgs) while 3,000 bales from Salehpat were reportedly sold from Rs 6,300 to Rs 6,600 per maund according to the quality On the global economic and financial front, confusion continues to remain worst confounded as no clear direction to rehabilitate the world's crippling economy seems to have emerged despite umpteen meetings between global and regional leaders over the past several years. Mistrust, outsmarting one another and pursuing national goals instead of evolving a global strategy to reshape and reinvent the world's multifarious economic and financial problems has been the approach to tackle the enormous work ahead of us.
As feared earlier, the viral effect of the peripheral economies of the Eurozone like Greece, Spain and Portugal has entered the body politic of the large economic entities like France and Italy, the world's fifth and eighth largest economies. Britain, the world's seventh largest economy, is faring no better. It appears that the only handy tool available to the Central Bankers is to print more money and dish it out to the people indiscriminately.
In this regard, the Federal Reserve Chairman of the United States, Ben Bernanke said this week that the American economy still needs more stimulus and is said to have warned the lawmakers at Capitol Hill that threatening budget cuts would slow down the economy further. Bernanke is said to have told a U.S. Senate panel that we should keep low interest rates, continuing the dollars 85 billion a month bond purchase scheme and boosting investment which remain a sine qua non for recharging the American economy.
In contrast to the Federal Reserve Chief's pronouncements in the United States, the outgoing boss of the Bank of England, Mervyn King is said to have told an audience of Japanese Bankers Association in Tokyo that monetary easing is no panacea to cure the wayward world economy. King's criticism seemed to be aimed to strike at the unshakeable faith of the Central Bankers in the United States and Europe that unrestricted money supply would boost economic growth automatically.
To add to the sundry and several failures of many countries in the world, Italy's recent elections have brought about fractured and indecisive results which have created a new impasse in its body politic. Such a development has cast an ominous shadow on the prospects of any early Eurozone economic recovery. Thus the political deadlock feared in Italy with a hung parliament has got the markets very worried. Thus, Italy may have to struggle for a long time before it may evolve a strong and steady government which may provide the desired stability to its body politic.
Italy today requires a strong government following fourteen years of zero growth and two years of recession. Under this dismal scenario, the Eurozone economic recession is poised to prolong much beyond 2013. With French economy on shaky grounds and now the Italian economy on tenterhooks, the outlook for any quick solution to the floundering global economy remains a distant dream.