With hardly 350,000 to 400,000 domestic size bales remaining unsold as floating stock in the market, lint prices have recorded a phenomenal rise since the beginning of this month (1st April, 2012).
Lower grades of cotton which were selling between Rs 4,000 to Rs 4,200 per maund (37.32 Kgs) three weeks ago in Sindh and Punjab are now selling between Rs 5,300 to Rs 5,400 per maund.Higher quality of lint which was selling from Rs 5,600 to Rs 5,700 per maund early this month in Sindh and Punjab is now fetching Rs 6,100 to Rs 6,300 per maund on cash basis.
New crop (2012-2013) has been delayed by about three to four weeks and is likely to arrive in July, 2012 in small quantities, but regular arrivals are expected to arrive in August/September 2012 subject to clement weather.
Under the circumstances, prices for both raw cotton and yarns remain tight.The current year’s (August 2011-July 2012) total output in Pakistan is estimated to be between 14.7 million to 14.8 million domestic size bales from which 1.5 to 1.6 million bales may be exported.
Mills will have lifted from 14.5 to 15 million bales while the imports may range from one to 1.5 million bales.
Trading circles in Karachi said on Thursday that there is a slight increase in enquiries from the mills to import cotton.Today’s seedcotton (Kapas/Phutti) prices in Sindh reportedly ranged from Rs 2,100 to Rs 2,400 per 40 Kgs as per the quality, while in the Punjab they were said to have ranged between Rs 2,200 to Rs 2,800 per 40 Kilogrammes.
Not much seedcotton, however, is left in the market.On Thursday, lint prices here in Sindh are said to have ranged from Rs 5,300 to Rs 6,100 per maund (37.32 Kgs), while in the Punjab they reportedly ranged from Rs 5,400 to Rs 6,300 per maund according to the quality.
Some reports indicate that cottons being sold on credit are being disposed at Rs 6,600 per maund in a tight market.
The Ministry of Finance has informed that the federal budget for the year 2012-2013 will be announced on the 25 of May, 2012 (Friday) in the National Assembly.It is expected that the Finance Bill (2012) covering new taxation measures will to be passed on June 18, 2012.
Naseem Usman Osawala, Chairman of the Brokers Advisory Committee of the Karachi Cotton Association (KCA) has sent several suggestions regarding cotton trade for consideration in the forthcoming Federal Budget and the Trade Policy to be announced in the near future.
Members of the Brokers Advisory Committee met on last Monday to discuss and finalise the suggestions.Proposals for the consideration of the government include reopening of the cotton hedge contract under the supervision of the Karachi Cotton Association (KCA) to stabilize cotton prices for all the stakeholders, continue free trading in cotton which is beneficial for the entire trade, find ways and means to increase cotton production for a growing textile industry in Pakistan, introduce the use of BT cottons, control the curl leaf virus and maintain buffer stocks of one to two million bales of cotton through the Karachi Cotton Association (KCA).On the global economic and financial front, a slew of optimistic news put the equity market several rungs higher on the performance ladder at the beginning of this week.
Alas, this optimism was short-lived.
By the midweek, worries over Spain and France again put Europe in a bad light and consequently dampened the global economic outlook breeding more worries for the investors.Bank of Spain data reportedly showed that Spanish banks had piled up bad loans to their highest levels since October, 1994, or 8.2 percent of their portfolios.
Bad loans in Spain are said to have accrued due to continuing fall in property prices and a looming recession.
It is forecast that banking problems in Spain will escalate as the government applies large cuts to its budget which will squeeze the Spanish people into deeper difficulty.French confidence in business was fading at the approaching weekend when the confidence in the approaching elections for the first round put incumbent Nicolas Sarkozy in a very negative light.
There were predictions that Socialist Party candidate Francoise Holland would bag an outright victory coming Sunday.
Business people faced a period of suspense over the possibility of a political change in France.Italy announced on Wednesday that recession would deepen during 2012 with the economy shrinking by 1.2 percent and also declared that balancing its budget could go beyond 2013.
Moreover, Italian authorities claimed to have made a modicum of progress to improve its economy, but it still has a very long way to go to bring its economy back on the track.
In fact, Italy faces numerous uncertainties which are likely to delay its recovery at any time in the near future.
It may be recalled that Italy entered into recession during the second half of last year (2011).In the United Kingdom, the FTSE index is reported to have dipped into negative territory on last Wednesday on fears of another recession in the Eurozone and also continuing fears of very poor performances in Greece, Spain, Italy and Portugal.
The apprehension in the change in French politics also damaged the business sentiment in Great Britain.
Analysts fear that second quarter earning results will be unable to match the better earnings of the first quarter and could drag down the Eurozone economy.Under these difficult circumstances, the International Monetary Fund (IMF) has advised the leaders of the Eurozone to devise a clear policy leading towards a fiscal union and also find ways and means to supervise their banks centrally.
Only such a path leading to an economic union in the Eurozone would bring stability and balance in the monetary policies of the zone.Drop in equity prices was also reported from the United States where low earnings disappointed the investors at midweek.
Earlier in the week, weak growth numbers in China and fading optimism over the American economy had over shadowed the equity markets.
It thus appears that even after five years when the first news of a global financial breakdown was reported we are still facing enormous economic problems with no signs of an early recovery.
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