Prices rangebound on cotton market

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Thursday was marked by slow activity on the ready cotton market though steadiness is said to have persisted. Thus the domestic market appeared rangebound as the ex-gin price of grade three cotton remained constant as determined by the Karachi Cotton Association (KCA) over the past several days at Rs 6,900 per maund (37.32 kgs).
Seedcotton (Kapas / Phutti) prices in Sindh reportedly ranged from Rs 2,000 to Rs 2,700 per 40 kgs, being marginally lower due to depleting lots of fine cotton in Sindh. In the Punjab, seedcotton prices are said to have continued to have ranged from Rs 2,000 to Rs 3,100 per 40 kgs, as per quality. Lint prices in both Sindh and Punjab reportedly ranged from Rs 6,000 to Rs 7,000 per maund. This season (August 2012 - July 2013) may end with an output of 12.95 million domestic size bales (about 155 kgs per bale).

Brokers said in Karachi that the ready cotton market is hung on a suspended animation with a quiet undertone. Mills are said to be facing payment problems and thus liquidity is said to be low in the market. Tax payments are at hand so that buying activity is comparatively restrained. Also, sale of yarns is said to have slowed down.

In the meantime, the Pakistan Cotton Ginner's Association (PCGA) has reported seedcotton arrivals (Kapas / Phutti) till the 1st of April 2013 for the current season (August 2012 - July 2013) at 12,888,028 domestic size lint equivalent bales (generally believed to be 155 kgs per bale) from which the domestic mills have lifted 11,851,234 bales.

Exporters are said to have picked up 343,603 bales while the ginners are still said to be holding an unsold quantity of 693,191 bales of cotton in both pressed and loose form. The ginner's cotton stocks are generally selling slowly. In Sindh, the weather is said to be conducive to start sowing early variety seeds for the next cotton season (August 2013 - July 2014), but sowing for the new cotton crop in Punjab will start later on. Sindh sowing for the new crop is possible due to availability of water and conducive weather.

Ready cotton sales reported from Punjab in the evening comprised 100 bales of cotton from Lodhran at Rs 6,150 per maund (37.32 kgs), 200 bales each from Garahmore and Kassowal at Rs 6,500 per maund, 100 bales from Yazman Mandi at Rs 6,600 per maund, 200 bales from Jalalpur at Rs 6,700 per maund and 200 bales from Kahrore Pucca at Rs 6,800 per maund.

On the global economic and financial front, depressing news from several quarters around the world pushed down equity prices on Thursday when weak global growth was forecast with fears that the weakness could extend further in the immediate future. Share indices are expected to come down in most markets.

First and foremost, the Eurozone's economic sickness arose from the PMI data said to be showing continued economic contraction; the Continent seems mired in deeper distress exuding hopelessness from all directions. It is a moot question whether the European Central Bank can incite hopes of revival of the European economies when interest rates in most countries are already very low to zero percent.

This scenario in the Eurozone promises to become more depressing when performance of other economies like the United States, Japan and India are taken into account. Procrastination and muddle mindedness have hitherto not resulted in any quick rehabilitation of the European economies. From Australia and Britain to India and the USA, almost all equity indices fell flat except Japan where the Bank of Japan proposes to print massive amount of currency to cope with the chronic deflation persisting since the past fifteen years. The Bank of Japan's aggressive policy to print notes is projected to augment money supply to make it very cheap to borrow money. Thus most of this excessive money supply would go to buy shares which will prop up the equity markets.

As a result, the Japanese Yen has fallen against the US dollar because the authorities believe that some inflationary steps could pull up the economy. As a result, though the Nikkei shares index went up but most other Asian economies turned downwards. In any case, as mentioned above, most European economies remain in a freefall condition.

As the volatility of economic performance continues in most parts of the world, we are witnessing that the global economic malaise is deepening its roots in most regions. Unemployment remains the primary economic concern globally as joblessness is increasing at a painful pace. Again this week, reports indicate that several more workers in the United States are said to have filed for their fist week of benefits than was expected last week. This development has been described as being contrary to the expectations of most analysts. This is said to reflect reduced hiring by the private sector because of slow down in the construction sector.

Thus we see that it is three years since the recession n in Europe has been in effect. Britain's leading index FTSE 100 declined on Wednesday following the economic downturn in the United States. While the Hong Kong shares have dipped, equities in China have reportedly said to have slipped to multi-week low levels. Moreover, shares slumped in Seoul to Egypt signifying a deeper malaise in the global economy. Thus most bourses around the world have snapped their winning streaks.

Courtesy: Business Recorder

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