In the domestic market, cotton rates have remained mostly unchanged since last week as sundry variables for our crop also remained essentially constant. Some ideas indicate that the domestic cotton rates have hit bottom which are quite below the international rates for similar styles. Thus import business is mostly slow in our market. Even yarn and fabric prices are presently exuding no charm for the millers though most of the mills remain in operation mode.
Several exporters of Pakistani textiles are worried about European buyers as their banks and financial position have become weak and could therefore be possible unreliable. Anyhow, Pakistani mills have mostly kept operating with comparatively better power supply but are worried with gas load-shedding which will increase their production costs.
The Pakistan Cotton Ginners Association (PCGA) released its seedcotton (Kapas/Phutti) arrivals report for the current season (August 2011 - July 2012) till the 1st of December 2011. Total arrivals for Pakistan have been given at 9,650,102 domestic size bales which shows an increase of 15.47 percent compared to the previous season (2010-2011) for the same time period. Mills are said to have lifted 7,269,048 bales from this quantity. Exporters purchased 342,959 bales during this period. Ginners are still retaining a reported 2.038,095 bales of unsold cotton with them in both pressed and loose form.
Traders said in Karachi on Thursday that total national cotton output during the current season (2011-2012) could add up to 13 million to 13.5 million domestic size bales on an ex-gin basis. Mills are expected to consume from 13.5 million to about 14 million bales, while exporters may ship between half a million to one million bales. Mills may import from one million to 1.5 million bales this season.
A notable change during the recent past has been the devaluation of the Pakistani rupee to nearly Rs 90 per United States dollar. This will benefit the spinners and exporters of Pakistani textiles considerably. Because the local spinners will mostly be using domestic cotton output of which is estimated at 13.5 million bales ex-gin of domestic size, they should benefit in the net analysis as local lint is selling at a discount compared to imported origins. Domestic trade and industry is expected to adjust to the consequences of the dearer dollar in the foreseeable future.
Most growers and ginners are said to be in profit except the growers of cotton in lower Sindh who have not only lost a sizeable output of their cotton but are also obtaining lower rates due to quality damage to the cotton because of rains and floods during the middle of this year.
Seedcotton (Kapas/Phutti) prices mostly remained unchanged and ranged from Rs 1,800 to Rs 2,300 per 40 kgs in Sindh and between Rs 2,000 to Rs 2,500 per 40 Kgs in the Punjab. Lint prices in Sindh reportedly ranged from Rs 3,800 to Rs 5,200 per maund (37.32 Kgs), while in the Punjab they are said to have ranged between Rs 5,000 to Rs 5,400 per maund according to quality.
In actual sales, 1,000 bales of cotton from Khairpur in Sindh sold at Rs 4,600 per maund (37.32 Kgs). In the Punjab, 1,000 bales from Harunabad sold at Rs 5,050 / Rs 5,100 per maund, 400 bales from Bahawalnagar sold at Rs 5,100 per maund, while 2,000 bales from Khanewal were said to have been sold at Rs 5,200 to Rs 5,300 per maund.
On the global economic and financial front, it is now more than three years that the United States remains in economic turbulence and turmoil. However, Europe is now the centre of focal attention where the single currency the Euro has created extraordinary row and ruckus for lack of better economic alignment between the Eurozone countries. The economic balance between the relatively higher performers like Germany and France on the one hand and laggards like Greece, Spain, Portugal, Ireland, Iceland and Italy has become shaky and needs a new alignment. As a consequence, credit rating agencies have put the Eurozone on a credit "watch" due to its continually deteriorating performance.
A sharp downgrade in rating of the Eurozone could spell further disaster to the global economic performance. Furthermore, the prevailing banking system in Europe and America which provides the superstructure for world financing is under serious attack. Indeed most of the European and American banking is under public sector control and is under attack from all sides of the economic spectrum.
What the ordinary people want is more transparency in the banking system and cut in the swollen perquisites of the larger than life banking bosses who demand and get bonuses and profits much beyond their regular pay. The "Occupy Wall Street" movement which originated at the Zannoti Park in New York in recent months manifests the angst and anger of the 99 percent of the people around the globe who are asking for a rebalancing of the pays and emoluments all across the employee spectrum.
Over the recent years the equity markets around the world have lost their traditional sheen. This week many bourses around the world gave a better performance on the hope that the leaders of Europe could hit upon a formula which would dissipate all their economic ills accumulated over the past three decades or so. However, such an exercise being scheduled to convene in Brussels on Friday is not without its darker ramifications.
The entire exercise and enterprise to tackle the deepening economic mess in the Eurozone could come to nought. To begin with, the ordinary citizen of the well performing economies of countries like Germany do no understand why they should pay for the poor performing countries with recurrent bailouts and extended loans from the taxpayers money. Furthermore, it is reasoned that the lagging economies are unlikely to stand on their feet again as the countries involved have squandered their treasuries indiscriminately and created an unmanageable mess by increasing deficits in their national budgets which resulted in a macroeconomic mess in their economies.
As result, not only Europe but also the United States, China, India, the Middle East and other larger economic regions are presently facing unsurmountable difficulties. Added to this financial and economic mess, the ongoing political struggles and conflicts in the Middle East, Afghanistan and the socio-political uprising in post election Russia all go to show how uncontrollable and uncertain the global trade, finance and industry can be, including the cotton business.
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