Posts Tagged ‘economic crisis’

COTTON…. “The soft, fluffy plant doing a great job”

China becoming export-oriented &‘hungering’ for most commodities for their industries at an alarming rate has been the main driver for high and increasing cotton prices.

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Cotton season 2009-10

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To start with the some statistics of current season 2009-10, the Cotton Advisory Board, in its recent meeting held on 8th April 2010 has placed the cotton acreage in the country during 2009-10 to 101.71 lakh hectares as against the acreage of 94.06 lakh hectares during the previous year. However, due to the vagaries of monsoon (irrigation coverage is 63%) & severe pest attack, cotton production in the country during this season has been revised downward from the earlier estimate of attack, cotton production in the country during this season has been revised downward from the earlier estimate of 295.00 lakh bales to 292.00 lakh bales as against cotton production of 290.00 lakh bales in the previous year.

Quantity in lakh bales of 170 kgs each Source: Cotton Advisory Board vide its meeting dt.08-04-2010

Arrivals scenario

As per the latest release by Cotton Corporation of India (CCI), cotton arrivals in India’s local markets were up by 3.3% to 27.90 million bales during the October- April period.

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Cotton Season 2010-11

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Assuming normal 2010 monsoon, India’s cotton production may increase by over 6% to a record 25 million bales in 2010-11 season, acc to the US Department of Agriculture. Productivity is also expected to rise by 6 per cent at 528 kg per hectare in the next season.

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Cotton mill use in 2009-10 rebounded faster and stronger than expected after a sharp drop in 2008-09 caused by the global financial and economic crisis.

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•Cotton ending stocks, a measure of available supply, for the current 2009- 10 year will drop by 43.35% to 40.5 million bales.

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Government Intervention

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In order to check the rise in prices of raw cotton in the domestic market, the government of India has imposed a duty on the export of the commodity. Apart from this, the Centre has also decided to levy a 3 per cent duty on cotton waste exports. An export duty of Rs 2,500 a ton is imposed export duty of Rs 2,500 a ton is imposed from April 9, 2010.

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The Deep Impact….

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•Ban on cotton exports has forced Pakistani buyers to look for alternative supplies.

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•Pushed cotton prices in New York to a two-year high on concern reduced exports from the nation may worsen tight global supplies.

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Global Scenario

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•World cotton production is forecast up by 13% in 2010/11 to 24.8 million tonnes, driven by high cotton prices.

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•World cotton mill use is expected to continue to recover in 2010/11, growing by 2% to 24.8 million tonnes, pushed by continued improvement in global economic growth but limited by high cotton prices.

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•World cotton trade is expected to increase to 7.7 million tons. Global cotton ending stocks are expected to remain stable in 2010/11. Global cotton stocks are expected to drop by 18% to 10.4 million tons by the end of July 2010, the smallest level in six years.

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•U.S. cotton plantings are accelerating, reinforcing expectations for a bumper crop following a wet winter in the big producing states. The U.S. cotton crop was 26% planted in the week to May 2, up from 16% the week before and slightly higher than the five-year average of 25% for this time of year, according to the latest data from the U.S. Department of Agriculture.

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Optimistic Outlook for Cotlook

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The continuous increase in Cotlook index was driven mainly by a rising gap between declining production and recovering consumption. The Cot look A Index jumped to over 90 cents per pound in the last part of April, after the Indian government announced the suspension of cotton export registrations and requested that cotton exports already registered, but not yet shipped, be revalidated, with a monthly  cap on revalidations to be determined.

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Conclusion

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To sum up, cotton futures last week declined in New York, but physical prices remained at a very high level on the international market irrespective of stronger U.S. dollar index. In absence of Indian exports, an expected short-supply is increasingly looming, especially for higher grades. Cotton prices will sustain its rally on back of shrinking stocks and non- availability of fine lint besides arrival of new cotton lots not before July 2010.

World Trade Organization (WTO) Chief Says Hopes of Doha Deal are Uncertain

The World Trade Organization (WTO) chief insisted members to resist protectionist pressure in the wake of the economic crisis, but said hopes of an early deal to free up international commerce are uncertain.

However, he said that in February this year, the global economic downturn was peaking while less than a year on; progress has been made but is not yet out of the woods.

Meanwhile, he said that the volume of world trade this year would decline a little more than 10%, which is unprecedented in modern times while in this environment, pressure for protectionist actions with their illusory gains for the domestic economy, will not necessarily diminish any time soon.

Further, success in completing the Doha round of trade talks next year as scheduled was vital to signal business and consumer confidence, and would strengthen the hand of governments as they confront protectionist pressures
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On the other hand, this will not occur unless they are all ready for heavy political lifting at home while there would be a “crunch time meeting” in the first quarter to check if the goal was attainable.

Dubai Debt News Sent a Shudder Throughout World Markets

Just a year after the global downturn  derailed  Dubai’s explosive growth, the  city is now  so  swamped  in  debt that  it’s  asking  for a  six-month  reprieve  on  paying  its bills.

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Dubai Debt Fears Grip World Markets

 

This has cast a shadow on a world only just emerging from the worst economic crisis since the 1930s,  knocking markets  from Sydney to Sao Paulo and raising questions about Dubai’s reputation  as a magnet for international investment.

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For India, which has tens of thousands of its citizens living  and working in the emirate,  the concerns are more direct:  thousands of its expats staring at job losses and  the economy, sharply reduced trade.

India, which gets nearly a quarter of the remittances from the United Arab Emirates and  has lakhs of laborers working in the region, could be worse off than most other nations  if the crisis escalates into a full-blown one  like the Russian or Argentinean crises of the past.🙂

India’s exports to the UAE stood at $23.92 billion in FY09.

It is very likely that we may see one more leg of job losses in Dubai.

The only consolation for the region is that Abu Dhabi is booming.

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Indian shares and the rupee fell in sync with other global markets where investors are fleeing for safety after Dubai debt trap concerns.

The Bombay Stock Exchange benchmark Sensex on Friday tumbled over 451.63 points to 16,403.30 points in the first ten minutes of trading on hectic selling by funds in line with weak global cues and concerns over Dubai’s debt.

Similarly, the wide-based National Stock Exchange index Nifty dropped by 140.50 points to 4865.05 points.

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Brokers said the selling focus was more on banking and realty stocks after Dubai’s debt problems revived concerns about the global financial system and rattled markets across Europe and Asia.

Indian rupee fell 24 paisa to 46.55 against the dollar.  The MSCI Emerging Markets Index lost 1.4%.

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Most European indices were about 2% lower after Asia tumbled.

The Shanghai Composite Index slumped 3.6%, its biggest drop since August, and Brazil’s Bovespa Index slipped 1.1%. U.S. markets were closed for the Thanksgiving holiday.

Credit-default swaps tied to debt sold by Dubai rose as much as 131 basis points to 571.

“Dubai isn’t doing risk appetite any favours at all and the markets remain in a vulnerable state of mind,” said Market analysts.

“We’re still in an environment where we’re vulnerable to financial shocks of any sort and this is one of those.”

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Precious Metals are on Record Setting Spree :)

Precious Metals are on Record Setting Spree

 

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As gold rallied by Rs 80 per ten grams to Rs 17,095 and silver firmed up by Rs 110 per kilo to Rs 28,510 due to constant demand from stockiest on account of rising trend  in global market, both gold and silver resumed at a record high on the bullion market.

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However, due to worries about future inflation and economic uncertaintiesanother record high in the Asian marketgold hit , while Asian stocks bounced back as the bearish dollar kept assets in demand.

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Meanwhile, spot gold increased as high as $1,143.95 per ounce in early Asia trade, settling just above $1,140 while standard gold rose by Rs 80 per ten grams to resume Rs 17,095 from the overnight closing level of Rs 17,015.

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On the other hand, pure gold also firmed up to Rs 17,185 from Rs 17,105 while silver ready too hardened by Rs 110 per kilo to Rs 28,510 from Rs 28,400 previously.

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Earlier due to frantic buying by jewellers in the midst of firming global trend, gold prices touched a record high of Rs 17,300 per 10 gram in the bullion market and Silver coins also set a record by adding Rs 400 to Rs 33,900 for buying and Rs 34,000 for selling of 100 pieces.

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Moreover yesterday silver also rose by Rs 1,000 to Rs 28,350 per kg.

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Sudden Surge and the record setting spree in the precious metals can be attributed to frantic buying of gold in marriage season.

In between, gold in international markets too has climbed to a record high along with the weakening of dollar.

RBI Emphasizes on Managing the Economic Recovery, For Now :)

RBI emphasizes more on Managing economic Recovery

 

The Reserve Bank of India, country”s Central bank, has said that managing economic recovery is now its focus area and the first phase of monetary tightening will arrest inflation without hurting growth.

RBI Executive Director Deepak Mohanty was found quoting  that at present, the focus around the world and also in India has shifted from managing the crisis to managing the recovery.

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He said that withdrawing soft monetary policy, which was initiated to weather the financial crisis is the key challenge.

“The key challenge relates to the exit strategy that needs to be designed, considering that the recovery is as yet fragile but there is an uptick in inflation, though largely from the supply side, which could engender inflationary expectations,” he said.

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Besides this, Mohanty said that the first phase of exit has been initiated by RBI in its monetary policy review in October 2009.

That was done mainly by withdrawal of unconventional measures taken during the crisis.

RBI, in its monetary review in October has raised the requirement for banks to hold portion of the deposits in cash, gold and government securities to 25 per cent.

Moreover, it had also done away with special liquidity provision for banks to provide money to mutual funds and others.

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Coming ‘Diwali’ – Gold Prices Set to Reach Over, Rs 16,000 level :)

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

After taking a brief consolidation, gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before ‘Diwali’.

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According to experts, gold prices have declined for a short period last week as the precious metal dipped following a counter rally taken by the dollar.

However, the US dollar index has again started showing weakness and today dipped by 0.6 per cent at 76.54 level, which will be positive for the gold price, SMC Global’s Rajesh Jain said.

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He said gold is likely to reach 1,020 dollar an ounce (28.34 grams) level in the international markets before ‘Diwali’.

However, in the domestic market the rising trend is likely to be capped with strengthening of Rupee against the US dollar, he added.

In the domestic market the prices are likely to be slightly over Rs 16,000 per 10 grams level, Jain said.

He said, the Rupee will keep on strengthening as the equity markets are performing well, which will encourage the Foreign Institutional Investors (FIIs) to bring in more money.

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Today, the gold was trading at Rs 15,585 per 10 grams, while in the global markets it was at $1,001 an ounce.

Meanwhile, independent analysts have remarked that the bull run in gold will continue as the various monetary and fiscal stimulus programs have failed to boost the world economy, feeding through to a dis-inflationary conditions.

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The US dollar, which is considered a safe haven, softens due to the weakening economic condition.

As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.

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Airline industry loss in 1st half : Over $6 billion !!

Airlines industry


Even as fresh figures showed some signs of revival in the passenger and freight business, Airline companies lost more than $6 billion during the first half of the year due to the economic downturn.

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However, it is said that a sample of more than 50 airlines found their losses declined to $2 billion in the second quarter from $4 billion in the first quarter.

Moreover, since the sample of airlines is incomplete, total industry losses in the first half of 2009 are likely to have been in excess of the reported $6 billion.

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Additionally, the Geneva-based group, which represents 230 airlines worldwide, stated that seat occupancy in international markets stabilized in July but airlines need to further cut capacity to meet demand.

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In addition, freight capacity also still exceeds demand despite an 8.1% capacity cut in July but with excess capacity continuing through Q2 it was not surprising that freight rates were down more than 20% over the year.

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However, it is said that companies increased their aircraft numbers by a net of 487, or about 2% of their overall fleet.

Replacement and expansion of the fleet has delivered significant fuel efficiency savings.

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Additionally, airline shares have risen 7.4% since the start of the year, lagging behind overall market improvements of 23%.

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While, stronger equity markets gave airlines an opportunity to raise more cash whereas airlines have raised $3 billion of equity and $12 billion from new debt issues since the start of the year.

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