Regular lifting by the domestic mills, continuous buying by the Trading Corporation of Pakistan (TCP) and abiding interest of the exporters to procure cotton has catapulted lint prices by Rs 300 to Rs 400 per maund (37.32 kgs) since last week. Prices of seedcotton have also shot up like wise by Rs 100 to Rs 150 per 40 kgs this week.
Prices for cottonseed (binola/kakra) improved by Rs 50 to Rs 75 per maund (37.32 kgs) this week and is now selling at Rs 775 to Rs 800 per maund, and similarly the price of oil cake (khali) has registered an increase by Rs 50 to Rs 75 per maund and is said to be selling between Rs 680 to Rs 690 per maund. the price of cottonseed oil which was selling at Rs 2,300/Rs 2,400 per maund (37.32 kgs) fifteen days ago and then sold at Rs 2,600/Rs 2,700 per maund last week is today being offered at Rs 3,300 per maund.
Another reason for the rapid rise in cottonseed, lint prices and its by products is due to decreased arrivals of seedcotton from the farming areas where large tracts of the cotton belt are said to be covered by dense fog since the last week or ten days.
Moreover, increased interruption and cut in power supply to ginning factories has reduced their outputs and hence resulted in short supplies. Traders say that rise in New York cotton futures prices in US dollar terms and some betterment in yarn prices has also inspired an improvement in some textile sectors.
Though the sinking global confidence and further deterioration in the economic condition of almost all the economies around the world continues unabated, the local fundamentals in our cotton economy, particularly the reports of improvement in the offtake of Pakistani yarns and a few other textile products has resulted in firmness in the cotton market since the last couple of weeks.
With New York cotton futures prices (ICE) for the frontal months touching 49 or 50 cents per pound, cotton prices are showing notable steadiness in our market. There is rumour in the market that the TCP will step up its procurement from the ginners and could also increase its procurement price because it is said to be contemplating exporting of cotton to China.
With large quantities of cotton already in the grip and hold of state procurement agencies in China, India and somewhat also in Pakistan, floating cotton in the free market might gradually dwindle possibly leading to more increase in lint prices. As a result, some of the better and bigger mills may start improving their performance, while the weaker and smaller units could face more problems due to exceptionally tight money market prevailing in Pakistan.
In the meantime, the war hysteria between India and Pakistan is showing some diminution on a gradual basis as the two nuclear neighbours may have pondered over the nightmarish nature and the attendant consequences of confrontation of any sorts or manner. Tensions between two countries have, however, not yet vanished in any final sense.
Up to now, the Trading Corporation of Pakistan (TCP) is said to have procured 556,000 bales of cotton from the ginners from which 57,000 bales have already been transferred to the TCP godowns. The exporters have sold an estimated 300,000 bales of cotton from which about 250,000 bales have already been shipped.
Thus the seedcotton (kapas/phutti) prices in both Sindh and Punjab reportedly prevailed higher between Rs 1,600 to Rs 1,700 per 40 kilogrammes. Lint cotton in Sindh was being quoted between Rs 3,100 to Rs 3,250 per maund (37.32 kgs) but upper Sindh (K-68) styles were being offered higher at Rs 3,300 per maund. Punjab lint was said to be selling between Rs 3,100 to Rs 3,400 per maund.
On last Wednesday, the March 2009 delivery on the New York cotton futures market settled at US cents 49.02 per pound (up by 105 points), May 2009 delivery closed for the day at US cents 49.31 per pound (up by 110 points), while the July 2009 delivery ended the session at US cents 50.61 per pound (up by 123 points).
Thus sharp gains are being witnessed on the New York futures market (ICE) buffeted by increased confidence by the players despite catastrophic conditions and continuing melt down apparent in the global economic situation. Therefore the rubric of cotton is being written separately from the global economic worksheet which latter shows perhaps the greatest breakdown ever in the world's economic structure.
The global economic landscape shows a miserable record for the outgoing year (2008), still continuing and wretchedly portending an unstoppable slowdown with disastrous consequences. Each day brings more misery to mankind while the economic managers and political leaders still remain clueless of the magnitude of the abhorable consequences of the prevailing disaster facing mankind at large.
It is due to corruption, lack of political wisdom and interminable greed which are the key ingredients of the leading economic powers that we have come to such a pass. The erstwhile economic oracle Alan Greenspan, former chairman of the Federal Reserve System (FRS), recently admitted candidly of the mistakes made over the past decades which have led to the global economic meltdown we are witnessing today.
In the evening it was reported that 200 bales of cotton from Mirpurkhas in Sindh reportedly sold at Rs 3,150 per maund (37.32 kgs), while 600 bales from Shahdadpur sold at Rs 3,200 per maund. In the Punjab, 600 bales from Hasilpur sold at Rs 3,200 per maund, 1000 bales from Sadiqabad sold at Rs 3,300 per maund, while 600 bales from Khanpur and 3400 bales from Liaqatpur both sold at Rs 3400 per maund. Price sentiment for cotton remained extremely tight at the nearing of the night.