Steady cotton market before Eid holidays

Cotton market was stable on Thursday when spinners opted to pick up their next fortnight's requirements ahead of the forthcoming Eid-ul-Azha holidays starting from the second week of November, 2011. Transportation will also become difficult to obtain after a few days as trucks will mostly be busy hauling sacrificial animals from the rural areas to urban centres for the coming several days before the advent of Eid. Most business activity will be reduced and then closed during first week of November for the Eid festival.
The Cotton Crop Assessment Committee (CCAC) which met in Islamabad this week issued its assessment that Pakistan is likely to produce 12.223 million bales (170 Kgs) of cotton during the current year (August 2011 - July 2012) missing the target of 15 million bales due to rains and floods during the earlier monsoon season, particularly in Sindh province which was primarily devastated.
In terms of running bales for which a median weight of 155 kgs may be assumed, traders said that this season may yield a total output ranging from 13 million to 13.5 million bales on an ex-gin basis. Consumption by domestic mills may also range from 13 million to 13.5 million local size bales. Exporters may ship between half a million to one million bales during the season and the mills may import anywhere from one million to 1.5 million bales during the same period.
International cotton futures (ICE) prices are stuck in a range in New York at around one dollar a pound in what appears to be a weakish market. Global economies still mostly facing uncertain times, any resumption of early economic recovery appear to be remote. After removing of Colonel Moammar Gaddafi from the Libyan scene, social unrest and uncertainty may plague Libya for the foreseeable future. At home, a respective political figure in the name of Begum Nusrat Bhutto expired recently and is being remembered with respect and reverence.
Seedcotton (Kapas/Phutti) prices in Sindh reportedly ranged from Rs 2,000 to Rs 2,600 per 40 Kgs on Thursday, while the seedcotton prices in Punjab are said to have ranged from Rs 2,400 to Rs 2,700 per 40 Kgs as per quality. Lint pries in Sindh ranged from Rs 4,500 to Rs 5,600 per maund (37.32 Kgs), while in the Punjab they are said to have ranged from Rs 5,600 to Rs 6,000 per maund as per quality. Most purchases are said to constitute Eid shopping of cotton to build near-term inventories while normal business may resume during the third week of November when holiday mood and its after-effects are gone.
The quality of cotton from Punjab is said to be good while Sindh quality reportedly suffers due to the rains earlier in the season. Fibre from Sindh is said to contain more contamination problems and also some concomitant colour problem. Ginners were said to be withholding cotton sales as they deemed New York futures advances depicting better values for cotton. In India, starting from Wednesday this week the Deewali festival of lights may extend its spirit for another couple of days.
On the international economic and financial front, the week started with fears and jitters regarding the degenerating Eurozone economy with Greece at its epicenter. Investors and equity holders were skeptical about the G-20 meeting in Brussels on Wednesday where Germany and France appeared to be the leading players. This imbroglio in the European economy has been going on since the last two years and it seemed that the entire Eurozone would drown in debt. Some even think that the very idea of a single currency, namely the Euro, is flawed. Thus the crunch crisis of the Eurozone currency elongated for a long time with no light appearing at the end of the tunnel.
Greece remained in a deep hole, scuffles ensued in the Italian parliament and market did not believe the Eurozone leaders and appeared to demand hard numbers which would signal the beginning of the end of the Eurozone's economic misery. The financial crisis continued mercilessly with bad news continuing to pour in from other corners of the world such as the downturn in the Chinese, Russian and the Indian economies which all led the "Occupy Wall Street" group to spread its tentacles to other cities around the world. The battle remains the traditional tussle between the haves and the have-nots around the world exhibiting a wide disparity between the two.
The twosome leaders of Germany and France did manage to put a better proposal to the Eurozone electorate with higher inputs including selling more bonds by the respective governments, strengthening the banks and shoring up their capitals or recapitalizing them and setting up a larger fund to the tune of one trillion Euros to assist any country in the Eurozone that might be moving towards the disaster zone like Greece, Spain, Portugal, Ireland, Iceland and the likes of Italy. These steps constitute higher inputs into the planning to avert a meltdown of the Eurozone financial system to avert a possible disaster which could easily travel to most other parts of the world.
The deal was done late on Wednesday after hectic meetings, particularly between Chancellor Angela Merkel and France's Sarkozy as these bigwigs took a strong decision to protect the shattering of the tenuous binding force which is holding the Eurozone together.
This nucleating of the seventeen Eurozone countries is the strongest proposal the member countries have put together and early reports indicated that the equity markets have accorded a tentative welcome to this decision. Even the banks in the Eurozone can be compelled to write off upto fifty percent of their bad debts. USA consumer spending and manufacturing have now also shown improvement but growth in the Eurozone remains a cause of concern. The Euro is also said to have risen to record a seven - week high against the US dollar. However, it remains premature to gauge if the Eurozone, or for that the rest of the world, is out of the woods.
These steps may stem the immediate financial crisis of the Eurozone because the proposals also apparently mean writing off of fifty percent of Greek debts and Italy may also get a respite. These developments breed optimism but the ailing housing sector in most of the sick economies continues to provide a difficult obstacle which needs to be crossed successfully. The dream of the robust and rebounding United States economy in the near future remains premature.