Due to general elections being held in Pakistan on coming Saturday (11th May 2013) there is scare activity on the cotton market. Most other businesses are also working at low level. Transport to haul cotton from the ginning factories to the spinning mills is mostly not available. Election fever in Pakistan has mostly over taken most other activities. Regular business may resume gradually from coming Monday onwards.
In consequence of the nearing elections in Pakistan and also the uncertainty accompanying it, holiday mood is prevailing in the country and thus most business is at a standstill. Thus reports of any cotton sales are not readily available. Even yarn sales are reported to be slow with low prices.
Thus the general mood in the market is subdued. Yarn rates are also said to be down because of decrease of buying by the Chinese. However, ginners are still said to be holding unsold cotton from the current crop (August 20112 - July 2013) ranging from 275,000 to 300,000 bales (155 Kgs). Most of this cotton is of average or below average quality.
Seedcotton (Kapas/Phutti) has been sold out. Lint prices are also said to be on the weak side with hardly any reported business. Lint prices in both Sindh and Punjab are said to range from Rs 5,500 to Rs 6,500 per maund (37.32 Kgs), according to the quality. Official figures mention prospective output for the forthcoming cotton crop (August 2013 - July 2014) at 14.1 million bales (170 Kgs). Some quantities of new crop may start arriving at the end of June or early July 2013.
Thus the buying interest in cotton is generally subdued in Pakistan because several medium and larger spinning mills and textile groups are covered with Pakistani cotton as well as foreign origins till August 2013 or even beyond that period. It may be recalled that Pakistan will reap nearly 12.9 million bales (155 Kgs) cotton during the current season (August 2012 - July 2013). We may note that the local lint prices are dull with hardly any buying interest.
Brokers reported later in the evening that due to provincial holidays declared in Punjab, Sindh and Balochistan, no business is practically possible this week. Thus resumption of cotton business will have to wait till next week. On the global economic and financial front, there was belief that sundry earnings reports showed notable improvement in the United States which was construed to mean a positive outlook for the economy. Taking cue from this promising development in the United States and also reports of encouraging figures of Chinese exports and progress in German industrial output, equity investors went the whole hog and helped push shares prices in most global markets to record high levels.
At mid week, United States stocks prices climbed higher into record domain as investors provided the necessary push to instill the desired stimulation for this phenomenal upward drive. The result: the Dow Jones industrial average rose 0.3 percent on Tuesday and the index closed above 15,000 for the first time in history.
The rise in US stocks prices is also being ascribed to the financial and technology sectors keeping the rally at Wall Street for the fifth consecutive session. Likewise, the Standard and Poor's also closed at another record high level. Seeing this phenomenal performance in rise of stocks prices, the other global bourses refused to be left behind. Thus on Wednesday the European markets also closed higher in tandem with the record rise in US equity prices. The Euronext 100 index was reportedly seen to attract solid support.
Thus the top share index of Britain viz. FTSE was reported from London to have hit a five and half year high level. Other European shares prices were no exception. The European shares prices are said to have risen to multiyear higher levels. The South East Asian market shares prices are said to have risen to five years high levels on Wednesday with the news that strong Chinese trade data contributed broadly to push up the equity prices in Asia.
Similarly, the Hong Kong shares also made their fourth day of continuous gains on Wednesday, while in Taiwan the stocks prices are said to have climbed to their highest in 21 months. Moreover, the Nikkei average in Japan touched a five years high level. So far, so good. The booming equity bourses have put up a phenomenal shallow almost everywhere. However, there are fears that while shares prices are reaching for the sky, the basic economic fundamentals in the United States, the Eurozone and even in the BRIC nations, besides elsewhere, are far from satisfactory.
The trouble is that the money markets are awash with cash flows from the United Sates Federal Reserve, the European Central Bank and the Bank of England. The global joblessness is growing, the peripheral economies in the Eurozone remain in the doldrums and the small and medium size businesses remain in trouble. Could an equities bubble be in the making?
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