Prices rebound on cotton market

With higher advices being received from the New York cotton futures (ICE) market, some demand from local exporters for a range of cotton styles from lower grades to higher quality lint and offtake reported for yarns - albeit in retail proportions - Pakistan lint prices have improved since about one week.
Sindh cotton prices are said to have gained by Rs 200 to Rs 400 per maund (37.32 Kgs) depending on quality, while Punjab cotton prices are reported to have gained by Rs 400 to Rs 500 per maund since last Friday. Seedcotton (Kapas/Phutti) prices on Thursday ranged from Rs 2,200 to Rs 2,700 per 40 Kgs in Sindh as per quality, while in the Punjab they are said to have ranged from Rs 2,400 to Rs 2,900 per 40 Kgs providing relief to the grower and also the ginners. Mills performance should also improve under the present circumstances.
With the tightening of the cotton market, lint prices in Sindh reportedly ranged from Rs 4,000 to Rs 5,700 per maund (37.32 Kgs), while in Punjab the ginned cotton prices moved up into the range of Rs 5,600 to Rs 6,100 per maund. The domestic bale size is presently said to range from 150 to 155 kilogrammes per bale. Exporters are buying cotton anywhere from Rs 3,900/Rs 4,000 to Rs 5,600 per maund according to their foreign enquiries. Reports, however, indicate that most cotton arriving at present is suffering from high micronaire values which go beyond the reading of five.
Traders are estimating that this year's cotton crop should range from 13 million to 14 million bales of domestic size on an ex-gin basis. Pakistani mills are projected to use from 13.5 million bales to 14 million bales while the exporters could ship from about half a million to about one million bales this season. Domestic mills are likely to import anywhere from one million to 1.5 million bales to meet their diverse requirements.
The turnover in the local cotton market has been quite positive in recent sessions as mills are reportedly getting better quantity of power supply while some of them have also fitted their own generators. Moreover, sales and exports of cotton products are also said to be somewhat better.
In Sindh sales in the ready cotton market reported till Thursday evening include 400 bales from Mirpurkhas and 1800 bales from Nawabshah both at Rs 4,800 per maund (37.32 Kgs) each. Two hundred bales from Kandiaro sold at Rs 5,200 per maund. In the Punjab, 200 bales of cotton from Fort Abbas sold at Rs 5,600 per maund (37.32 Kgs), 200 bales from Khanewal and 400 bales from Burewala sold at Rs 5,800 per maund, 200 bales from Khanewal also sold at Rs 5,825 per maund while another 400 bales from Khanewal sold at Rs 5,850 per maund. Later, 400 bales from Rahimyar Khan and 1,000 bales from Khanewal sold at Rs 5,900 per maund. However, ginners from Rajanpur and Mianwali were said to be unwilling to sell their cotton even at Rs 6,100 per maund.
On the global economic and financial front, earlier glee carried on from last week when the European Central Bank had started buying of Italian and Spanish Bonds fizzled out as investor appetite became cautious and confidence stooped low in the equity markets. Reports indicated that the Euro fell for a third continuous session against the US dollar to a five week low level.
Besides the economic illness in the Euro zone since the last three years and which is becoming chronic, shares also fell in the United States as banks in America are said to have sizeable exposure to the borrowers in the sick Euro Zone countries which are easily facing their worst crisis on record. Japan is also facing an economic adversity bordering on a crisis because of the European banks crisis, a strong and unrelenting yen and the floods in Bangkok where it has considerable investment and trading interest.
Thus the bottom line is that many if not most United States banks said are to be vulnerable to Euro zone debts and the sundry meetings and measures taken over the past couple of years by the European leaders have turned out to be "too little and too late", besides just being patchwork solutions which have not worked. There appears to be no long-term programme with the Euro zone leaders which has the desired credibility to pull out the continent from its endless woes.
In fact, there appears political chaos in both Greece and Italy. Europe seems to be facing its biggest challenge since the second world war. While the Euro zone leaders were preparing to take tough measures against the credit rating agencies, the credit rating agencies in their turn were reported to be poised to further reduce the credit worthiness of some of the Euro zone countries. However, the credit rating agencies are deemed to be too powerful to face curbs on their operations. An idea was also being mooted in the Euro zone government circles to create an independent credit rating agency.
While these developments continued to plague the Euro zone and consequently the rest of the world, it was being said that the fourth quarter growth data in the Euro zone would be very disappointing.
On its part, the International Monetary Fund (IMF) was said to be worried about the financial vulnerabilities in China. Italy continues to face an acute financial crisis. In fact, the entire Euro zone appears destined to fall into a recession. Italy has a new prime minister in the person of Mario Monti, a technocrat to the core. In Greece Lucas Papademos has become the new prime minister. However, with the reported cost to European banks of swapping Euros for dollars last Wednesday to its highest level since the collapse of Lehman Brothers, can Euro zone survive with a single currency where member countries have different political and economic aims and ideologies? Reports on Thursday indicated that at midweek the equities in USA fell as European woes increased, the Nikkei declined in Tokyo, the Britain's top share index FTSE went down on fears of dwindling growth and the Mideast markets turned sluggish in the presence of global economic gloom.