Last update: Fri, 12 Feb 2016 07pm

Cotton prices remain firm

Even though the purchases were reported to have been slow and the bullish fervour has somewhat abated, cotton prices were well held on Thursday in the ready market. Both the prices of seedcotton (Kapas/Phutti) and lint were reported to have made handsome gains over the past one week or ten days.

Seedcotton prices have reportedly moved up by Rs 200 to Rs 300 per 40 Kgs in both Sindh and Punjab. The prices of low quality lint in Sindh reportedly rose by Rs 300 / Rs 400 per maund (37.32 Kgs), while the higher quality lint is said to have gained upto Rs 300 per maund.

For the lower quality of lint from Punjab, prices are reported to have gone up by about Rs 200 per maund (37.32 Kgs), while the rise in the prices of higher quality of lint were said to have increased by Rs 150 to Rs 200 per maund in a steady market. Till the evening, cotton sales of 12,000 to 15,000 bales were estimated to have been finalised. The total estimated crop for the current season (August 2014/ July 2015) is said to be around 14.5 million bales (155 Kgs). Heavy fog since the past two or three weeks in Punjab is said to have slowed down seedcotton arrivals.

Seedcotton prices in Sindh are generally said to have ranged from Rs 1800 to Rs 2500 per 40 Kgs, according to the quality, while in the Punjab they are reported to have extended from Rs 2000 to Rs 2900 per 40 Kgs on Thursday. Lint prices in Sindh were said to have generally ranged from Rs 3800 to Rs 5100 per maund (37.32 Kgs), while in the Punjab they are said to have extended from Rs 4700 to Rs 5300 per maund.

Now most Pakistani mills are looking for higher grades of domestic cotton but there is less demand for the lower grades of lint. In recent past, yarn prices were said to have improved but now the prices of yarn have reportedly become easier. The polyester fibre prices are said to have gone down due to decrease in the petroleum prices.

Business turnover in the ready cotton market was said to have been low. In the Punjab, 200 bales of cotton from Chichawatni were said to have been sold at Rs 4900 per maund (37.32 Kgs), while 400 bales from Harunabad reportedly sold at Rs 5000 per maund.

On the global economic and financial front, printing money and providing sundry stimuli to the investors, the United States, the Eurozone, Great Britain, Japan, China and others managed to scrape through the year 2014, but the pace and traction of any sustainable recovery was unimpressive. The equity markets in most countries, however, made record gains thanks to cheap money thrown by several governments into the market.

We must realise, however, that a makeover of any economy without substantial performance by its various sectors will remain a cosmetic change but will not transform it into a sound or substantial measure.

European stock markets remain very vulnerable due to the very poor performance of the southern European markets where the peripheral countries like Greece, Spain and Portugal remain entrenched in inherent and deep weaknesses which require a true overhaul to pull them out of their predicaments.

Greece is an example where political chaos has erupted following the rejection of the presidential candidate by the legislators. A proposed fresh election in Greece is being deemed to be a sure hit prescription to derail the country's bailout programme. Such a tense situation has put a dread into the minds of leaders of such countries like Germany and France, the countries deemed to form the core of Europe. Therefore, Europe remains a sick economic region where the Eurozone has been shifting from one crisis to another. Thus fears have been reported regarding a possible flare up concerning the sovereign debt crisis in the Eurozone.

In the United States, a rise has been reported in jobless claims for the week ended 27 December 2014. Though it is generally believed that overall condition in the work market will improve, but this current weak report upset some analysts. Generally, it is believed that the American economy is in a better shape than other regions around the globe.

In China, it was reported from Shanghai, factory sector activity shrank for the first time in seven months in December 2014. A report by Reuters from Shanghai stated that questions will be asked whether a weak factory performance will warrant more support measures to avert a sharper economic slowdown, or whether more steps are needed to stimulate economic growth.

In other news, France has set a record in joblessness. Russia is showing its first signs of a recession. Asian shares were down earlier this week on worries about Greece. Singapore productivity performance is reported to be disappointing needing a significant improvement.

In Latin America it is being feared that its economy could slow down where Argentina, Brazil and Venezuela will suffer badly as the growth in Latin America has been below world average growth over the past four years. If the recent past in any guide, excess liquidity poured by sundry governments into the banks may continue to push up the equity values to create new records.

Copyright Business Recorder, 2015