Pakistan Domestic Cotton Prices Remain Stable

As the domestic cotton season (August 2012 - July 2013) is advancing fast, dearth of quality numbers in the foreseeable future is keeping lint prices on a steady plane. It is projected that seedcotton (Kapas/Phutti) arrivals of about 11.7 million domestic size bales will have reached the ginning factories till the 1st of January, 2013. By January 1, 2013 domestic mills will have lifted about 9.5 million local size bales, the exporters nearly 200,000 bales while ginners will still be holding about two million bales unsold on that date from the current season.

It is feared that due to fog and dewdrops, the essential quality of the current cotton crop will go down gradually. Some of the better stations from the current crop in Sindh are said to include the Khairpur District or Upper Sindh. In Punjab, areas or stations still producing finer class of cottons include Rahimyar Khan, Khanpur and Mianwali. Most good cotton in Sindh is said to be the carryover from previous months.

It is projected that the current cotton crop in Pakistan will range from 13.5 to 14 million domestic size bales on an ex-gin basis, while the Pakistani mills will be consuming from 15 to 16 million bales this season. Exporters may ship half a million to one million bales while the domestic mills may import from two to 2.5 million bales. Pakistani mills have booked about 1.8 million bales for import till now.

Local yarn prices are tight and mills are generally said to be making good returns. Punjab textile industry, however, is said to be in trouble because of large cut in power and gas supplies which has rendered the industry ineffective and inoperative.

In this connection, the All Pakistan Textile Mills Association (APTMA) leaders Ahsan Bashir, Chairman, and group leader Gohar Ejaz have called for protest in Multan and Faisalabad from Friday (28 December 2012) and in Lahore on Saturday till power and gas supplies are restored to the textile industry. The leaders of APTMA claim that they are suffering large closures of their mills due to unwarranted stoppage of gas and power supply. Other Associations and Chambers like the Lahore Chamber of Commerce and Industry (Farooq Iftikhar, President) the All Pakistan Textile Mills Bedsheets and Upholstery Manufacturers Association (Khjawaja Mohammad Younus, Chairman) and Pakistan Textile Forum (Asghar Ali, Chairman) are backing APTMA.

Seedcotton (Kapas/Phutti) prices on Thursday ranged from Rs 2200 to Rs 2500 per 40 Kgs in Sindh while in Punjab they are said to have ranged from Rs 2300 to Rs 2800 per 40 Kgs. Lint prices 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 5,500 to Rs 6,100 per maund. About 600 bales in Rahimyar Khan sold at Rs 6,050 per maund.

On the global economic and financial front, till last reports the standoff between President Obama and the Republicans in the USA continued to form the issue number one bothering the world at large. President Obama is now said to cut short his holidays in Hawai to rush to Washington D.C. to attempt to forestall the whole financial and economic gamut from falling off the "fiscal cliff" on January 1, 2013.

It is now a game of nerves because if new legislation is not introduced within the next three days, automatic increase in taxes and cut in government spending will come into force. This neglect will certainly push the United States into another recession. And then the domino effect will pull down all the other nine pins which together with the United States form the ten largest economies of the world viz. USA, China, Japan, Germany, France, Brazil, Britain, Italy, Russia and India.

China is already experiencing a slowdown and needs a reflation. According to an AFP report from Beijing, "China's financial system is facing increasing risks due to soaring bank loans, with lending to the property sector and local governments a particular concern".

The global shares markets are going through a confused situation with poor investors hoping for some positive turn around in the so-called "fiscal cliff" talks which are reported to be resuming immediately. In the mean time, at midweek it was reported that shares prices on Wall Street remained mostly unchanged. Shares prices in China, Seoul, Russia, Japan, Canada and Taiwan rose at midweek but investors were just biding for time till the outcome of the "fiscal cliff" talks becomes more clear and conclusive in America.

In the mean time, a Reuters report from London informed that "Already struggling at home with weak revenues and tough new capital and leverage requirements, investment banks are now also facing a slump in their once most promising business - emerging markets".

Modern banking as it evolved in the post - World War Two period in the USA, United Kingdom and Europe has lost trust of the people over the past three decades or so. Depositors - indeed the public at large - want more regulation of the banks.

People have lost faith in the banks managers which needs rehabilitation. A new bank "culture" should be evolved which should restitute the confidence of the depositors, sundry other clients and indeed that of the bank employees at large. Modern banking is the bedrock of modern investment and development functions and without setting it right again there will be no wholesome growth and progress of the global economy at large.