Cotton prices have been depicting a steady posture since last week due to approaching end of the season, higher advises from the New York Cotton Futures (ICE) market and restrictions placed on exports by the Indian government.
Besides the depleting domestic stocks of cotton coupled by increased activity of the Pakistan cotton exporters, an increase of nearly six cents per pound in the May 2012 futures delivery in New York have also imparted strength to fibre prices.
Also the reports that India is reaping a nine precent lower crop this season than envisaged earlier and that USA has sown thirteen percent less cotton during next season (2012-2013) have impacted cotton prices positively. Lack of necessary cotton shipments from India to Bangladesh and elsewhere have given rise to both raw cotton and yarn prices. Growers in Pakistan presently fear lack of adequate water in lower Sindh for next season (2012-2013), but they also fear that possible rains and floods in later months may inflict damage to cotton crop like in some areas of Sindh in the outgoing season.
Exporters are said to have registered cotton sales of about 1.2 million (1,200,000) bales of domestic size which number could swell to 1.5 million (1,500,000) bales during this season. Total cotton crop in Pakistan this season (August 2011 - July 2012) could be about 14.7 million (14,700,000) to 14.8 million (14,800,000) domesctic size bales this season, or slightly below fifteen million (15,000,000) bales.
Cotton waste and lower counts of yarn have received more enquiries. Therefore prices of seedcotton (Kapas / Phutti) of lower grades have gone up and the price of lint has also recorded an increase. The price of seedcotton in Sindh ranged from Rs 1,900 to Rs 2,350 per 40 kgs while in the Punjab they reportedly ranged from Rs 2,000 to Rs 2,650 per 40 kilogrammes on Thursday.
Lint prices have also gone up by Rs 100 to Rs 200 per maund (37.32 kgs) according to the quality. In Sindh they are said to have ranged from Rs 4,000 to Rs 5,600 per maund (37.32 kgs) while in the Punjab they reportedly ranged from Rs 4,200 to Rs 5,700 per maund according to the quality. Business was scarce to modest till the afternoon.
Energy and gas shortages in the country have led to wild scale protests accompanied by arson, shattering of public and private property and closure of business and industry. In Karachi ethnic violence started earky this week following the murder of two local leaders of MQM, a leading political presence in Pakistan's business capital. Later, an ANP worker was also murdered. Shortages of public utilities like gas and power have reached a new high while there are also news of impending increase in the prices of petrol, diesel and compressed natural gas.
A lone sale of 500 bales of cotton was reported in the evening from Rahimyar Khan in the Punjab at Rs 5,400 per maund. On the global economic and financial front, Spain has entered the limelight where workers unions are observing a country-wide strike against labour reforms including the right being given to the owners to hire or fire the workers at their will. Accumulation of large debts and increasing unemployment problems, nearly a quarter of the workforce is unemployed which is pushing Spain to seek a bailout this year. That would need large funding by the so-called "troika" comprising the European Union, European Central Bank and the International Monetary Fund (IMF). There are signs of mass discontent in Spain.
Seeing the ineffectiveness of the Eurozone economic condition, the organisation of Economic Corporation and Development (OECD) has suggested that the Eurozone should double its bailout fund to stem further economic decline in Europe. The general feeling is that to be globally efficient and competitive, the European companies must be "meaner and leaner" to remain in business. The United Kingdom also needs a similar makeover. Presently, the growth and development in Europe and the UK are deemed to be slow and difficult.
Economic sanctions against Iran have also been responsible for the rise in crude oil prices globally which is also increasing the cost of production. Losses have also been reported from the European plants of General Motors and Lloyd's of London. Insurance business has suffered globally due to losses in Japan following the tsunami, in Thailand due to floods and also in Europe, Australia and the United States due to the vagaries of the weather.
Recovery in the United States may be deemed "statistical" because unemployment in America continues to remain stubbornly high. Untold millions of Americans continue to suffer unprecedented unemployment. There are also fears that the true unemployment figures are not totally contained or accommodated in the official figures.
Early this week there were reports from Brazil that its economic activity declined in January, 2012. India's economic growth countinues to decline as it also continues to be mired in gigantic corruption scandals. Thus at mid week nearly all the equity markets declined once again due to lack of confidence in any quick economic recovery in most of the countries around the world, including both emerging as well as advanced economies.