Easier tendency on cotton market

After a sustained rise in lint prices since the beginning of this month on fears of rain and flood damage to the domestic crop and also the steady increase on the New York cotton futures market (ICE), cotton prices took a breather and recorded a decrease of Rs 200 to Rs 300 per maund (37.32 kgs) depending on the quality. At work were both local and foreign influences.
Locally, it was felt that Pakistan 's premier cotton producing province Punjab may escape any notable damage to its crop. In Sindh, rains may gradually cease and flood waters could recede in due course of time though till now they have ransacked the cotton standing on the fields and created havoc. It still remains premature to give any final idea of the current crop (2011-2012) output in Pakistan, but it is being estimated to range from 12.5 million to 13.5 million domestic size bales on an ex-gin basis. Last year's (2010-2011) bale size is said to have fluctuated between 150 kgs to 160 kgs giving us an average figure of 155 kgs per bale.
Yarn prices were also weak in our market on reports that India has booked nearly half a million bales of 2010-2011 cotton crop in exports. Also, yarn sales in India have increased due to the reported expiration date of subsidy on yarn exports by the end of this month.
Worry on account of any quality deterioration remains concerning both the Sindh and Punjab crop due to the recent rains. Also, the havoc of floods in Sindh is not yet over as many millions of people are suffering and have been dislocated. Recently, it is also feared that Sindh floods this year (2011-2012) may equal to the disastrous flooding which occurred during the previous year (2010-2011).
Generally speaking, seedcotton prices in Sindh reportedly ranged from Rs 2,300 to Rs 2,800 per 40 kgs, while in the Punjab they are said to have ranged from Rs 2,000 to Rs 3,000 per 40 kgs according to the quality. Lint prices in Sindh reportedly ranged from Rs 7,000 to Rs 7,300 per maund (37.32 kgs), while in the Punjab they were also said to have ranged from Rs 7,000 to Rs 7,300 per maund in an easy market which reported moderate business till the evening.
Sales were reported on Thursday of 200 bales of cotton from Sultanabad in Sindh at Rs 7,000 per maund (37.32 kgs), 800 bales from Khairpur at Rs 7,300 per maund and 800 bales from upper Sindh at Rs 7,300 / Rs 7,350 per maund according to the quality.
In the Punjab, 200 bales of cotton from Bahawalpur were reported to have been sold at Rs 7,200 per maund (37.32 kgs), while 200 bales each from Burewalla and Arifwalla and 300 bales from Multan were said to have been transacted at Rs 7,300 per maund. Two hundred bales from Khanewal were sold at Rs 7,400 per maund. The tone of the market is said to have remained easy. Rains in some areas were reported from Punjab which were forecast to continue till Friday. Hitherto, increased and sustained cotton arrivals had been reported to be continuing in Punjab where most of the ginning factories were now said to be operational.
Thus we witnessed a relative slowdown in cotton business with a somewhat bearish tendency as it appeared on Thursday. Still about one hundred spinning mills are reported to be closed which may resume output later on with the rationalisation of lint prices and improvement in yarn rates. Both the cotton and yarn markets have not yet stabilised. Death occurred recently of S.M.A.Rizvi, a leader and pioneer of the towel industry in Pakistan. He was well respected in trade circles.
On the global economic and financial front, the condition deteriorated further primarily due to the concern that Greece was heading towards a second default. Italy fared no better despite its announcement of an austerity plan with 54 billion dollars over the next few years. Moreover, the knowledge that leading French banks are exposed with their loans extended to Greece has also unsettled the normalcy of the French financial condition.
Thus the high drama in the political and financial circles continued in the Eurozone which has been moving in circles without the proper, coherent and unstinted measures being provided by its leadership. The result has been that while the political bigwigs and the financial gurus kept talking of the remedial measures to normalise the recessionary condition of Europe and tackle the mammoth unemployment in Greece, Spain, Italy, Portugal and elsewhere in the Zone, the economic condition kept deteriorating during much of this week. A weaker and wobbling Europe further destabilised the United States where unemployment figures and move toward poverty continued to enlarge.
Specifically speaking, the rating agency Moody's has reduced the rating of two of France's leading banks, namely Societe General and Credit Agricole. Thus we witnessed a very volatile week in the Eurozone where equity holders lost confidence on any plausible improvement they may expect from its leadership. Thus a feedback between Europe and the United States and vice versa kept flowing in a two way traffic to demoralise the economic condition on both sides of the Atlantic.
It now appears that there was less substance and more rhetoric on part of the leaders of the world's topmost economies since the debacle of Lehman Brothers three years ago. This week the leading exercise was whether the Eurozone could keep the Italian finances afloat keeping in mind that Italy has reportedly piled up a nearly terrifying two trillions of both domestic and foreign debt.
Take the instance of Bank of America which recently announced that it would lay off a reported 30,000 personnel within the next few years. Moreover, the estimated expenditure ranging from three to five trillion dollars by the Unired States on war efforts in Iraq, Afghanistan and on other related expenses are said to have depleted a considerable part of the American treasury. It is not only the United States, the question being asked is whether the other giant economies can pay back their mountains of public debts. Thus the Eurozone is facing such a serious economic problem that it has not seen such an adversity since the twelve years.
The leading players involved in the Eurozone crisis met this week ie a meeting was held between Germany's Angela Merkle, France's Nikolas Sarkosy and embattled Greece's Papanderou to find some fix to the intolerable economic and financial problems. Equity prices rose at midweek on the hope that though some battles may have been lost on the economic front, but not all has been lost and that the war against a possible European and in turn a global recession may yet be won.