After some signs of weakness seen over the last couple of days, the ready cotton market has assumed a steady stance with resumption of increased turnover. Settlement of political differences culminating on the resumption of Iftikhar Mohammad Chaudhry as Chief Justice of Pakistan together with his deposed colleagues.
Much improved resultant business sentiment and gradual return of normalcy in Pakistan and the beginning of some increased enquiries for yarns and other textile goods and buoyant equity markets in the country have contributed towards the increased working in several economic sectors in Pakistan.
Last few days have seen more enquiries for raw cotton in the market but ginners remained selective in their selling while the spinners were cautious buyers. With large scale depletion of good quality cotton from our market, Any remainder of good grades of lint are being offered by the ginners at a premium or higher margins.
Thus what recently seemed a moribund cotton market appears to be gaining some stability and steadiness. However, any increases of cotton prices are likely to remain selective and in smaller quantities because most of the unsold lint from the outgoing season (2008-2009) is of generally poor quality.
In some cases, the ginners are not selling better qualities of cotton easily despite interest shown by the millers to pick up comparatively higher grades of lint. Reports of improvement of yarn prices and increased demand have also been received. However, it must be kept in mind that the bulk of the Pakistan textile industry will take much more time to enter into full gear of operations.
The seedcotton (kapas/phutti) arrivals for the current season (2008-2009) reported by the Pakistan Cotton Ginners Association (PCGA) upto the 15th of March 2009 are given as 11,304,462 lint equivalent bales of domestic size. This is marginally higher than was being anticipated by the trade. Thus it now remains possible that the total ex-gin output for this season (2008-2009) may touch 11,350,000 bales net which would be almost the same output achieved during the previous season (2007-2008).
From these numbers, mills are reported to have picked up 9,830,704 local size bales, while the exporters are reported to have lifted 294,665 bales. The Trading Corporation of Pakistan (TCP) has lifted 180,333 bales till the middle of this month. That leaves an unsold quantity of 998,760 bales left with the ginners in both pressed and loose form. Unginned cotton lying with the ginners is equal to a bare 21,840 lint-equivalent bales.
After a long period of time, the Wall Street showed a rising streak in equity values four days in a row last week which spilled over till the beginning of this week. The Far Eastern and some stock markets followed suit and co-joined the rising spell in a correlated effort. However, a slew of more dour and desperate news received this week from many countries in the world blunted this performance so that this week the equity values at best remained a mixed bag of activity.
In the forefront, the American International Group (AIG) reportedly went wild to give United States dollars 175 millions to its executives and staff personnel as bonuses and other handouts despite incurring gigantic losses and continuing to suffer huge deficits unceasingly. Similarly, more and more bad news is coming from several other business organisations in the USA including banks, automobiles and other trades and industries which have not used the various stimuli packages diligently. Therefore, such shenanigans of the top executives of leading business organisations have bred disgust and distrust of ordinary taxpayers who are shocked at these occurances. Therefore, the support for stimuli packages by the citizens has dropped in the USA.
Furthermore, the specter of rising trade barriers and protectionism are giving nightmares to the global economic managers who are working hard to save the flailing economies. President Barrack Obama has announced a scheme to create a fund of United States dollars 1.2 trillions to rescue the US economy which still keeps diving down.
The equity markets only bucked up following the soothsaying by the United States federal reserve chairman Ben Bernanke recently that a positive dynamic is in the offing in the United States economy which could possibly lead to a global recovery during the following one or two years. The G-20 nations which met recently also announced that their respective governments will do all that it takes to extricate the global economies from their downtrodden condition.
However, there remain other analysts and observers who contend that too much hype and hyperbole as per public pronouncement of the global leaders are unlikely to remedy the dismal economic condition any time soon. They point to the recent downswing of the Chinese economy, the increasing recession in the Japanese economy, the crisis of large scale unemployment all over the world, the breakdown of the banking system in Europe and elsewhere, a cluster of bad news from the eastern European economies are also indicative of more bad times to come.
Therefore, now we are at a crossroads where one direction seems to point to a possible path of recovery, where as the other direction points to what appears as a capitulation of capitalism as an economic system. A number of assessments point to the fact that the global economy is in a shambles.
Thus more reports from China, India, Bangladesh and Pakistan point to more setbacks to the textile industry before it can revive again. Therefore, the textile industry like the other sectors of various economies may face more problems before they recover again to give a fuller performance.
Generally speaking, lint prices in Pakistan ranged from Rs 3,050 to Rs 3,250 per maund (37.32 kgs) in Sindh, while in the Punjab they ranged from Rs 3,050 to Rs 3,300 per maund on Thursday. The ex-gin price of Grade 3 cotton remained unchanged at Rs 3,150 per maund.
In actual business reported on Thursday, 600 bales from Nawabshah in Sindh sold at Rs 3,100 per maund, 400 bales from Shahdadpur sold at Rs 3,150 per maund, while 400 bales from Mirpurkhas said to be of superior quality sold at Rs 3,175 per maund.
In Punjab, 400 bales of cotton from Sadiqabad sold at Rs 3,190 per maund; another 400 bales from Sadiqabad sold at Rs 3,200 per maund; 400 bales from Khanpur are said to have been sold at Rs 3,225 per maund, while 2,027 bales from Khanpur were also sold at Rs 3,300 per maund. Next Monday the 23rd of March 2009 will be public holiday due to Pakistan Day.