As and how domestic current crop (2010-2011) cotton stocks are being exhausted, lint prices are perking up showing stability and steadiness. There are only an estimated 60,000 bales of unsold cotton left in the market which are likely to be lifted within the next two or three weeks.
Their presence in the market is hardly a significant factor in cotton trade. Exporters, however, may indulge in buying some quantities for their shipments against sales of cotton they made when lint prices fell early last month. Not much seedcotton (kapas/phutti) from the current season (2010-2011) is left in the market but its notional price was said to be in the range of Rs 2,500 to Rs 3,000 per 40 kilogrammes. New crop (2011-2012) seedcotton has started arriving in smaller quantities in such southern Sindh areas as Badin, Thatta and Mirpur Sakro and is being delivered to ginning factories in Shahdadpur in Sindh and Harunabad in the Punjab.
New crop seedcotton is said to be selling at Rs 3,500 per 40 Kgs. A couple of ginning factories may start pressing new crop cotton from the middle of this month ie June 15, 2011 if there are no intervening rains. There are sellers for new crop Sindh at Rs 8,500 per maund (37.32 Kgs) for mid-June 2011 delivery but there are no apparent buyers.
Cottonseed (Kakra/Binola) from the new crop is being offered at Rs 1,125 per maund (37.32 Kgs) in Sindh and Rs 1,225 per maund in Punjab. New crop cotton (2011-2012) is said to be shaping up very well. In case of rains, there may be commensurate delay in picking of the new crop.
Current crop (2010-2011) prices of lint remain steady with a fair demand in the market. Yarn lifting is said to be picking up but it may take some more time to dispose off all the earlier stocks which had built up during the depressed period when cotton prices were sinking from their record high levels earlier.
On the New York cotton futures market (ICE) cotton prices reportedly fell by about 16 cents per pound this week, but were said to have recouped by about two cents at current reckoning (Thursday evening, Pakistan time). Karachi traders said that pressure might build up on the July 2011 futures contracts in New York over the next few weeks when mills have fixed their on call purchases and hedge funds reduce their holdings in the July 2011 contract. Thereafter, the December 2011 futures contract in New York may remain the essential barometer on which physical cotton prices may revolve. Continued drought in Texas and flooding along the Mississippi river remain causes of concern.
As far as the global cotton prices are concerned, the decision of the Indian government to allow another one million bales (170 kgs) for export in addition to the existing quantity of 5.5 million bales is not significant. Moreover, some Pakistani spinners are apprehensive the leftover stocks of Indian cotton may suffer from grade or micromere problems.
In other news, Sheikh Muhammad Akbar, Chairman of the Pakistan Cotton Forum (PCF) convened a meeting on June 7, 2011 at APTMA House, Lahore to finalise a proposal for the government to restructure cotton research work in the country by forming the Pakistan Cotton Research, Development and Marketing Board (PCRDMB) in place of the existing Pakistan Central Cotton Committee (PCCC). The idea is to re-energise and reinvigorate cotton research and marketing in Pakistan and obtain higher yields, output and quality of cotton in the country.
In this connection, the Chairman of the All Pakistan Textile Mills Association (APTMA), Gohar Ejaz, presented a detailed paper on the subject which was discussed amongst the representatives of the growers, ginners, millowners, and the Karachi Cotton Association (KCA) The KCA is seeking higher representation on the proposed Center of Excellence , namely the PCRDMB, as KCA has worked closely and actively with the PCCC since its inception and also has wide experience as its members including growers, ginners, exporters, spinners and government nominees have the requisite experience in cotton trade and marketing since 1933.
It may be recalled that the Pakistan Central Cotton Committee (PCCC) was formed in 1949 under the Pakistan Cotton Cess Act 1948 with the object to develop the growing, marketing and manufacture of cotton. It is a semi-autonomous body with several subcommittees to boost cotton research, technology and marketing. The PCCC and its research developed several varieties of cotton over the past many years and Pakistan s output of lint which was only about 1,106,000 bales (170 Kgs) in 1947-48 with a yield of 142 pounds per acre increased to range from about 10 million to 12 million bales during the period 2000-2001 and 2008-2009 with a yield of more than 600 pounds per acre. In fact, during the year 2004-2005, the total cotton output in Pakistan was close to 14 million bales of running size.
It is hoped that the PCRDMB will continue the tradition of boosting cotton output and quality in the country by introducing new technologies and improve management of the crop to meet the soaring needs of the textile industry of Pakistan.
On the international economic and financial front, the situation got worse this week. Barring a few countries like Switzerland or Germany, most others saw their recoveries slow down or falter. Thus the global economy is still struggling to attain growth amidst several negative factors ranging from the deterioration in the southern or peripheral economies in the Eurozone like Spain, Portugal, Greece and Italy to natural disasters like the earthquake and tsunami in Japan, recent floods and storms in Australia and the United States and also unwarranted speculation in the commodity markets.
Thus from Greece and United Kingdom to the United States of America, the respective governments are piling up unsustainable public and sovereign debts which are not only difficult but appear impossible to pay back. The global finance and banking system is under attack even though the chairman of the Federal Reserve Bank of the United States of America Ben Bernanke may be mulling over the idea of introducing a Quantitative Easing Three (QE-3) programme.
Amidst all the economic imbroglio facing the world, the Organisation of Petroleum Exporting Countries (Opec) has split as two of its important members, namely Iran and Venezuela, are supporting increase in crude oil prices which is bound to shatter any industrial or business confidence which was entering into the global economic recovery. Particularly, the aviation and hospitality industries will face serious consequences in case fuel prices continue to rise further.
In any case, rising food prices, inflation and unemployment in a wide range of countries continue to take their toll against any economic recovery which may have been coming up. The report this week that the Japanese, the world s third largest economy, has started shrinking again is another blow to any hope of global economic recovery in the near future. Under the circumstances, it was but natural that global equity markets remained negative throughout this week.
Besides the continuing social unrest in such countries like Greece, Spain, Portugal, Ireland and Italy which is becoming more fearsome as youths have rejected any austerity measures being proposed by their respective governments, the emergence of the scourge of E.Coli in Germany has distressed the agriculture sectors of Spain, France and Germany where all are shook up badly.
Besides, the ongoing conflicts, wars, civil wars, insurgencies and uprisings in the Middle East, Afghanistan, North Africa, Afghanistan and Pakistan promise to delay any global economic recovery, financial rehabilitation or normal resumption of business activity for many more years to come. In the mean time, glittering gold and the swanky Swiss Francs may continue to shine and shimmer for the foreseeable future.
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