Despite a lot of hullaballo in the domestic market since the past several weeks regarding significant losses projected for the current crop (2009-2010) in Pakistan, the recent seedcotton (kapas/phutti) arrivals report issued by the Pakistan Cotton Ginner s Association (PCGA) for the period ending 1st October 2009 shows an increase of about 700,000 lint equivalent bales compared to previous season (2008-2009) triggering fall in lint prices since beginning of this week.
Lint prices have consequently lost Rs 125 to Rs 150 per maund (37.32 kgs) this week in the ready market and the official grade three price of cotton has been reduced by the Karachi Cotton Association (KCA) by Rs 75 per maund for the same period.
As a consequence, seedcotton (kapas/phutti) prices were reported to range between Rs 1,600 to Rs 1,625 for 40 kgs in Sindh, whereas they were said to have also ranged lower in Punjab between Rs 1,600 and Rs 1,650 per 40 kgs on Thursday. These reduced prices of seedcotton show a decline of about Rs 75 per 40 kgs over the past three days.
Likewise, lint prices also suffered a decline of about Rs 150 per maund (37.32 kgs) from the commencement of this week. In Sindh, as well as in the Punjab, the lint prices prevailed lower in the range of Rs 3,425 to Rs 3,475 per maund. The tone of cotton prices continued to remain weak in the evening.
According to the PCGA, the total seedcotton (kapas/phutti) arrivals for the current season (2009-2010) on a national level was 3,079,254 lint equivalent bales of domestic size till the 1st of October 2009 as against 2,364,008 bales for the same time period during the previous season (2008-2009).
A gain in seedcotton arrivals of 27.12 percent has been reported from Punjab while Sindh province has reported an increase of 33.08 percent. National increase of seedcotton arrival this year compared to the previous season (2008-2009) is 30.26 percent till now. We may thus surmise that the national output of lint in Pakistan during the current season (2009-2010) should range between 11.8 million to 12.5 million domestic size bales on an ex-gin basis if the weather remains clement.
Many growers have started ignoring the advice of the agriculture experts who suggest that sowing of cotton should be cultivated later on in March or April in Sindh and May or June in Punjab to obtain higher yields and also avoid pest attacks more properly. However, the growers have found out that earlier sowing is producing better yields and pest attacks have also not occurred yet. Of course the ultimate results will be found out later in the season, or even during the later seasons whether they are more prone to pest attacks and similar drawbacks because of early sowings.
In Karachi cotton circles, however, the general idea of the current crop s (2009-2010) output is close to 12 million domestic size bales on an ex-gin basis. As against this, ideas of mills consumption of cotton this year have been increased to 15 million bales (170 kgs) which would seem to necessitate import requirements of at least 2.5 million domestic size bales during the current season.
Brokers said in Karachi that currently the daily arrivals of seedcotton (kapas/phutti) are estimated at 70,000 lint equivalent bales which are likely to rise to 100,000 bales on daily basis in the near future. The export sales of cotton which are currently being estimated at 300,000 bales (170 kgs) may soon rise to 500,000 bales if the local lint prices remain low.
Moreover, the Pakistani rupee has slipped to more than 83 units against the greenback which will provide ample fillip to both raw cotton and textile exporters. Therefore, mills in Pakistan may be importing anywhere from 2.5 million to 3 million bales (170 kgs) of cotton this season (2009-2010).
Ready sales of cotton include 1,000 bales from Sultanabad in Sindh at Rs 3,425 per maund (37.32 kgs), 2,000 bales from Mirpurkhas at Rs 3,450 per maund, 2,000 bales from Tando Adam and 5,000 bales from Shahdadpur at Rs 3,450/Rs 3,475 per maund each. In the Punjab, 400 bales from Sahiwal sold at Rs 3,425 per maund while 6,000 bales from Rahimyar Khan sold at Rs 3,500 per maund.
It may also be noted that exporters of textiles even get Rs 85 or more against their exports for the future months as forward sale rates of the United States Dollar is considerably more than the spot rates prevailing now. With relatively higher demand for yarns and comparatively low-end textile products from Pakistan, our export prospects have improved considerably.
On the foreign equity markets, the inexorable rise in share prices have shown uncommon tenacity despite several bad reports on many economic fronts. Such dichotomy between the poor performance of the real economies in many parts of the world pitted against the rising tempo of equity markets is baffling. More recently, many analysts, economists and business pundits have started saying that a double dip recession in the global context is a foregone conclusion.
Thus they are now betting on a W type of a recession which can easily extend our woes to 2010 or 2011, or even beyond. No doubt that Australia never saw a recession, but its recent increase in bank rates indicates that it is trying to contain a possible inflationary push in its economy. Steve Palmer of Microsoft, however, sees a slow global growth and recovery. However, the American and British banks are loathe to increase bank interest rates to avoid any prolongation of the recession or to avoid the pitfall of plunging into a deeper recession.
However, the problem remains as to how countries like the United States will pay back the gargantuan debts they are accumulating. As it is, the USA owes trillions of dollars to China, besides having built up a budget deficit of US Dollars 1.4 trillions by trebling the deficit this year.
Clearly, the United States economic performance and finance management remains unsettling which have led China, Latin America, the Middle East and several other countries to consider changing their intervention currencies for global trade to other currencies and adopt the Euro, the Japanese Yen or even the Deutsche Mark. The unfolding economic drama and the persisting financial mess has obviously prompted the Chairman of the HBSC bank to demand an apology from the bankers of the leading economies whose financial shenanigans have brought us to such a pass.
In other domestic news, Mr Anwar Ahmed Tata has been elected as the Chairman of the All Pakistan Textile Mills Association (APTMA) for the year 2009-10, while Mr Sheikh Muhammad Akbar, Mr Shahzad Ahmed and Mr Khalid Kuli Khan Khattak have elected as the vice chairmen.
The members of the Executive Committee of APTMA include Mr Zahid Anwar, Mr Sheikh Muhammad Akbar, Mr Gohar Ejaz, Mr Javaid Siddiqi, Mr Danish Kaiser Monnoo, Mr Khawaja Muhammad Younus, Mr Shaukat Ellahi Shaikh, Mian Muhammad Jehangir, Mr Shahid Mazhar, Mr Shahzad Ahmed Sheilh, Mr Shahzad Ali Khan, Mr Ahsan Bashir, Mr Anwar Ahmed Tata, Mr Shahzad Ahmad, Mr M.Junaid Nawab, Mr Tariq Saud, Mr Nadeem Maqbool, Mr Waqar Monnoo, Mr Asif Inam, Mr Shams Rafi, Mr Junaid Haji Latif, Mr Amanullah Kassim, Mr Ahmad Kuli Khan Khattak, Mr Khalid Kuli Khan Khattak, Mrs Hoor Yousafzai and Mr Tariq Mehmood.