Despite a stretch of long holidays beginning Wednesday and extending till the beginning of next week, lint prices remained subdued most of this week. In fact a new spell of monsoon rains over a vast tract of cotton in Sindh, particularly lower and middle Sindh, did not inspire any notable increase in cotton prices, Some rains also fell in parts of Punjab, but they did not firm up the cotton prices. Two or Three hundred thousand bales may have been lost in the recent rain pouring.
What also worried the growers, the ginners are well as the spinners was possible emergence of some quality problems, particularly appearance of pale colour and some spots in Sindh styles and also dullness in the Punjab fiber. But these problems have not, as of date, given any signal regarding a possible major loss of seasonal output. If the rains remain moderate, and the floods keep at low and medium levels in the major rivers and their tributaries, any fear of a significant loss to the standing cotton crop remains premature. However, the behaviour of the weather over the next three weeks or so remains crucial to the development and health of the crop.
Thus till now the original acreage for the current season (August 2011 - July 2012) remains mostly intact promising to deliver an output of 15 million domestic size bales or possibly lower on an ex-gin basis. With this news emanating from the cotton market, textile brokers added that the yarn prices were also lacklustre. With most of trading activity coming to a stand still, business in cotton and textile should resume sometime early next week after the extended Eid-ul-Fitar holidays followed by a weekend.
Since the last six days the Karachi Cotton Association (KCA) has been fixing the ex-gin rate of grade three cotton at Rs 6,000 per maund (37.32 Kgs) without any change. In the ready market, seedcotton (Kapas/Phutti) prices reportedly ranged from Rs 2,350 to Rs 2,550 per 40 Kgs in Sindh, while in the Punjab they are said to have extended from Rs 2,300 to Rs 2,700 per 40 Kgs, according to the quality.
Lint prices in Sindh reportedly ranged from Rs 5,600 to Rs 5,700 per maund (37.32 Kgs), while in the Punjab they ranged from Rs 5,800 to Rs 6,000 per maund as per quality. Fresh arrivals of seedcotton in larger quantities are expected after the Eid holiday period. Upto the 1st of September 2011, about 1.4 million bales equivalent of seedcotton (Kapas/Phutti) will have arrived into the ginning factories from the current crop (2011-2012). Arrivals could have been higher but have been delayed due to rains and now the impending holidays.
Textile circles, say that they could obtain a parity in their spinning operations if lint pries for fair quality of cotton is around Rs 5,800 per maund (37.32 Kgs). In brief, henceforth the behaviour of the weather holds the trump card concerning the health of the cotton crop which should otherwise give a record performance.
Law and order situation in Karachi has gone worse over the past two or three months. Hundreds of people have been killed in internecine, ethnic and turf wars. Large scale attempts and acts of abductions and blackmail are being reported daily. With this depressing and dangerous situation, the businessmen and industrialists have been scared out of their wits. The brutal murder of Sheikh Khalid Iqbal, a senior industrialist and Chief Executive of Quetta Textile Mills Ltd in Karachi on Tuesday, is a fresh reminder of the horrendous law and order situation obtaining in Karachi, Pakistan's largest city and its business capital. May Allah rest his departed soul in eternal peace and grant fortitude to his family members to bear this irreparable loss.
On the global economic and financial front, Chairman Ben Bernanke of the Federal Reserve Bank gave indication this week that it would provide more business friendly measures to keep the American economy moving despite its nearly unsurmountable difficulties. This assurance gave courage to sundry commodity and equity markets which turned to positive territory. However, the underlying weaknesses in many countries around the world gave little hope of an early economic recovery.
For instance economic clouds overhang on Japan where it has just elected its 5th prime minister in five years. Moody's downgraded Japan's financial rating when its monumental economy slipped back into recession and its exports fell following the recent earth quake and tsunami from AAA to AA3.
India's business confidence hit a two year low as companies were reported to have been shaken by a slowing of both the domestic as well as the global economies. In the Eurozone, a slowdown continues as internecine squabbles worsen between the seventeen member states debating how to rehabilitate the Zonal economic downturn.
It is not for nothing that the new International Monetary Fund (IMF) Chief has asked the Eurozone to take urgent measures to shore up its economy. In fact, Christine Lagarde advised the Eurozone banks to recapitalise their equity to a more desirable extent.
Now we have learnt that the United States economy came to a halt during the first six months during 2011. it grew only one percent during the April/June 2011 quarter. Therefore, despite the rise in equity prices this week in several markets around the world, the fundamental weakness of the global economy remains a very disturbing phenomenon.