Cotton prices were somewhat steady on Thursday but the trade lacked normal activity. Business was slow because it was reported that yarn sales were slack and liquidity was short in the market. Global prices of yarn were also reported to be weak.
Despite reports of tighter cotton prices in both the United States and India, yarn offtake was reportedly slow. Some reports indicated that domestic yarn situation was quite slack. It is generally believed that ginners still hold about one million bales (155 Kgs) unsold cotton with them from the current crop (August 2013 - July 2014). There were also reports that new crop (August 2014 - July 2015) sowing in early sowing areas will be delayed by about 10 or 15 days due to rains in the cotton belt.
According to the seed cotton (Kapas/Phutti) arrivals report issued recently by the Pakistan Cotton Ginners Association (PCGA) for arrivals till the 1st of March 2014, 13,328,667 lint - equivalent bales were received by the ginning factories from which the domestic mills lifted 11,966,299 bales. Exporters picked up 363,394 bales while the ginners had 998,974 bales of unsold bales left with them.
While most of the seed cotton has disappeared from the market, particularly in Sindh, the nominal rate for Sindh seed cotton was said to be in the range of Rs 2500 to Rs 3100 per 40 Kgs. In the Punjab, the price of seed cotton was said to extend from Rs 2500 to Rs 3300 per 40 kilogrammes.
Lint prices in Sindh reportedly ranged from Rs 5600 to Rs 7000 per maund (37.32 Kgs), according to the quality. In the Punjab they are said to have ranged from Rs 6700 to Rs 7000 per maund. Traders added that in some areas in Sindh cotton prices were quite weak and prices were also veering lower. During the current season (2013 / 2014), Pakistan would produce about 13.5 million bales (155 Kgs) on an ex-gin basis.
According to recent reports, the Pakistan Central Cotton Committee (PCCC) announced that during the forthcoming season (2014-2015), Pakistan would produce 15.1 million bales. From this total, Punjab is envisaged to produce 10.5 million bales, Sindh output is projected to be 4.2 million bales and Balochistan / Khyber Pakhtunkhawa would together contribute 0.4 million bales on an ex-farm basis. A sale of 400 bales of cotton from Lodhran in Punjab was reported at Rs 7000 per maund (37.32 Kgs) in a relatively quiet market.
On the global economic and financial front, there was revival of the equity markets at midweek after a fearful fall earlier in the week. Reports said that Russian troops had captured Crimea in the Ukraine sent shivers amongst the investors all around the globe. Many observers felt that a new Cold War had started between Russia and the West toppling shares prices sharply.
It took Russia's Foreign Minister Sergei Lavrov himself to assure the world that "armed forces" deployed to Ukraine's Crimea region were not Russian but "self - defence forces". Later both Lavrov and United States Secretary of State John Kerry scheduled talks to whittle down the tensions which somewhat calmed down the equity markets which had become jittery. It is yet to be seen which way the ball bounces.
Then there is talk that a housing bubble has been building which is likely to crash just like in 2008. Several operators on Wall Street are reported to be warning that Wall Street is about to crash due to the shaky housing market in the foreseeable future. A group of real estate dealers and housing operators in the United States are warning the government of an impending housing market crash.
Then there are the business oracles like Warren Buiffet and George Soros who are reportedly of the view that Wall Street numbers are likely to tumble sharply. Hitherto, the Wall Street is keeping its poise and despite all the volatility, equity prices are generally maintaining record - high levels. Nevertheless, there are those die-hard pessimists who believe that Wall Street is bound to tumble shedding its value by 50 percent. These hopeless people continue to perceive that on the aggregate the equity values on Wall Street will lose half their worth.
Moreover, harsh weather over a large swath of the United States cut down shopping and consumer spending thus denting the American economy notably which the Federal Reserve dubbed as "unusually severe weather". Other news included reports that the European Commission on Wednesday put France under close watch over its failure to rein in its deficit. Negative news from some companies in the United Kingdom pulled down FTSE 100 index on Wednesday. Similarly, Hong Kong and Chinese stocks also drifted lower on Wednesday. However, early morning reports indicated that several equity markets had recouped on Thursday.
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