During the outgoing fortnight (October 15 to 1 November 2014) a record arrivals of seed cotton (Kapas/Phutti) calculated at 3,038,035 lint equivalent bales was received by the ginners from the current season (August 2014 / July 2015) which promises to increase the size of the standing crop. Estimates and projections regarding the size of the standing cotton crop in Pakistan vary from 14.5 to 15 million bales (155 Kgs).
According to the seed cotton arrivals report issued by the Pakistan Cotton Ginners Association (PCGA) till the 1st of November 2014, 8,382,419 lint equivalent bales have been received from which the domestic mills have pricked up 6,060,151 bales. Exporters are said to have lifted 239,234 bales, while the ginners are thus holding an unsold quantity of 2,083,034 bales. At the prevailing rate of seed cotton arrivals, about 9.5 million lint equivalent bales may have already arrived into the ginneries till now.
Cotton consultant Naseem Usman said in Karachi that the Chairman of the Trading Corporation of Pakistan (TCP) recently met with the ginners who is clearing ground to commence procurement of cotton from the ginners. For this purpose, the TCP will reportedly start buying 600 bales from each ginner with an initial payment of 85 percent. The TCP is reported to have activated its ten procurement centres and the relevant staff is being put in place. The TCP will be procuring one million bales to begin with, which will have to be wrapped in export packing.
Both raw cotton and yarn prices were weak on Thursday. Seed cotton prices in Sindh reportedly ranged from Rs 2000 to Rs 2500 per 40 Kgs while in Punjab they are said to have extended from Rs 2450 to Rs 2650 per 40 kgs, according to the quality. With the prices of hydrocarbon products having fallen considerably, such fibres like polyester and others will be priced much lower which will give a tough competition to cotton.
Activity in the cotton market was said to be slow as cotton rates are said to have retreated recently by Rs 100 per maund. Indeed due to large supply in the world including the inventories in China, India and the United States, cotton prices are presently portraying a depressed picture.
In ready cotton sales reported on Thursday, 2000 bales from Khairpur dirtrict in Sindh are said to have been sold at Rs 5000 / Rs 5100 per maund (37.32 Kgs). In the Punjab, 600 bales from Vihari were reported to have been sold at Rs 5050 / Rs 5100 per maund, 400 bales from Harunabad sold at Rs 5100 per maund, 1000 bales from Khanewal sold at Rs 5175 per maund, 400 bales each from Bahawalpur and Yazman Mandi sold at Rs 5200 per maund, while 1000 bales from Rajanpur were sold at Rs 5250 per maund. The cotton market is said to have remained weak in the evening.
On the global economic and financial front, equity values shot up sizably on Wednesday once the world learnt that the Republican Party in the United States gained complete control of the American Congress following last Tuesdays midterm elections. The Republicans are known for their business friendly attitude which cheered a broad spectrum of the business community not only the USA, but also had a positive influence in several parts of the world.
However, this jubilance was short lived when investors, businessmen, bankers and industrialists had a second look at the ground realities. Thus by mid-day on Thursday, the Asia-Pacific and the European bourses started to rethink and mostly calmed down to negative territory. After all, the continuing and deepening economic ills around the world would hardly be wished away with a magic wand.
To begin with, Transparency International has conveyed from Washington D.C that most of the business behemoths have failed to provide transparency in their dealings so that a survey of their activities indicates that due to their secretive attitude it remains difficult to probe into their indulgence in bribery, corruption and tax avoidance.
Economic observers, amongst other things, are very fearful that both China and the Eurozone have weak underpinnings which are restraining the global economy to move forward. Thus the European Union and China are being deemed as the largest worries with regard to any possible global growth in the foreseeable future.
Economic analysts also add that growing geopolitical upheavals and conflagrations in the Middle East, Ukraine and in the disputed Kashmir area result in large spending on militarization which eat up any possible monetary infusions into the economic sector.
Another fearful development is the major decline in the prices of commodities. It is not just Australia, China, the Middle East or India, most of the other emerging economies are largely dependent for their income in exporting different commodities and raw materials such as crude oil, cotton, rice, maize, soyabean or even gold and uranium ore. Any steep fall in the price of commodities could hurt the producing countries beyond repair.
Like the erstwhile plagues in earlier centuries, the curse of Ebola may get viral and go out of control which could not only wipe out communities but also hurt global trade materially.
Recent news have indicated that energy-exporting countries which sell hydrocarbons in different forms will have to recall and reclaim their petrodollars presently parked in leading banks around the world due to shortage of liquidity. Such a step would result in a decline in global liquidity leading to further recessionary outcome.
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