Lower output props up cotton prices

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Sizably lower cotton outlook for the current cotton crop in Pakistan due to extensive rains and floods have stabilised lint prices at steady levels in a mostly range bound market. Pests are also said to have impacted the cotton crop largely. Thus the general price idea of seed cotton (Kapas / Phutti) from Sindh extended from Rs 2400 to Rs 2900 per 40 Kgs, while Punjab seed cotton prices reportedly ranged from Rs 2500 to Rs 3050 per 40 Kilogrammes, according to the quality. The quality of cotton during the current season (2015 / 2016) has also suffered notably.

Generally speaking, lint prices in Sindh reportedly obtained from Rs 4800 to Rs 5,550 per maund (37.32 Kgs) , while in the Punjab they were said to have ranged from Rs 5300 to Rs 5,550 per maund on Thursday. official circles have blamed the several seed companies in the private sector for the substandard seeds provided to the growers, together with low quantity of seeds supplied in the market.

Traders said in Karachi that the projected size of the current cotton crop in Pakistan (August 2015 / July 2016) would thus be about 12 million bales (155 Kgs), while the mills consumption this year would be around 14.5 million bales. Mills are therefore likely to import 2.5 million bales during the current season. Exports could be around half a million bales during the current season. Nearly 1.4 million bales have been reportedly booked for import till now.

Over the weeks and previous months, yarn prices have remained subdued. However, on Thursday there was some enquiry for cotton yarns due to shortage of the current crop in Pakistan and also the depreciation of the Pakistani rupee in the market which was reportedly ranging around 107 against the greenback. Textile traders, however, had recently stated that nearly one million spindles had become idle in Pakistan due to high cost of doing business and shortage of utility supplies like gas and power over the previous years.

In the ready cotton sales reported on Thursday from Sindh, 200 bales from Sanghar sold at Rs 4900 per maund (37.32 Kgs), 1,200 bales from Khairpur sold at Rs 5375-Rs 5400, 200 bales from Rohri and 400 bales from Daharki sold at Rs 5500 per maund each in a steady market.

In the Punjab, 400 bales from Bahawalpur reportedly sold at Rs 5400 per maund, 400 bales from Ahmadpur East sold at Rs 5,400 / Rs 5,500 per maund, 1000 bales from Mianwali sold at Rs 5,525-Rs 5585 per maund and 400 bales each from Liaqatpur and Harunabad at Rs 5,550 per maund.

Mian Muhammad Mansha, the foremost industrialist and businessman with large interests in Pakistan ranging from textile, power generation, insurance, cement, hotels and other ventures has donated Rs 5.5 crores to the Punjab Instutute of Cardiology (PIC). Besides his business acumen. Mian Mansha is well known for his philanthropy, promotion of education and large donations for the needy people. He also runs large business ventures abroad.

On the global economic and financial front, equity on both sides of the Atlantic saw their values decline in tandem with the downside slide of the commodities in anticipation of a rise, however modest, of interest rates by the American Federal Reserve Bank before the end of the current calendar year. Many individuals and institutions now believe that the US economy is in a better position compared to the previous years. However, as the American economy, even as the foremost global economy cannot go it alone and many if not most countries in the world are still facing continued adversities as far as their economies are concerned.

A major number of economies around the world are still very vulnerable to the headwinds they are facing trying to prop up their economies. Needless to say, a global slump increases the chance of a recession. Thus several equity prices around the world turned lower at the beginning of this week, United States prices are reported to have lost more than one percent at the beginning of this week fearing rise in interest rates and weak trade data appearing in China.

Weaker than expected trade data from China seems to be a preamble to more troubled times during the next year and beyond as excessive spending by government employees and rampant corruption are said to be deeply entrenched which partly remains a hindrance to an early or foreseeable economic recovery. Thus the government’s seven percent economic growth target may not be met. There is some talk in economic circles that Eurasia could drive the global recovery but such a proposition remains questionable. Anyhow, as far as China is concerned the two leading drivers of economic growth, exports and infrastructure development remain a drag on any early economic growth.

The Euro Zone economy remains lopsided due to disparate partners where the core countries like Germany and France may be in a better economic condition, but Greece, Spain, Portugal and Italy remain essentially mired in a regressive economic condition. Thus the Eurozone cannot achieve a lift-off despite a number of tailwinds as seen by several remains slow paced. Broadly speaking, hardly any plausible gain appears to have been achieved during the current year. The Eurozone growth is expected to falter.

Furthermore, growth forecasts in the United Kingdom remain vulnerable to slowdown in the global economy. Many challenges are said to remain in the global economy, including the essential fragility of the European economy. Growth in major emerging economies is also said to be weakening. High quantum of debts and rampant unemployment, besides uneven distribution of wealth reportedly left over from the global financial crisis remain deeply entrenched. Investments and growth are anemic in the emerging markets. The Eurozone remains poised negatively with problems like the Grecian disaster with low inflation and high unemployment.

Indeed Moody’s anticipate poor global growth over the next two years, viz till 2017. Unabated influx of refugees in Europe from the Middle East, Far East, Northern Africa and Afghanistan has created a gigantic socio economic as well as disturbing political problems globally from Afghanistan, Burma and Bangladesh to Syria, Libya, Lebanon to Iraq.

Fissiparous political tendencies in India are growing and have risen to dangerous levels. From Sikhs and Kashmiris in the North west to Nagas in the Northeast, likewise ISIS which is reportedly spending its terrorising tentacles, have shaken. Indian’s economic progress. The crack-up of Southern Sudan as a nation is calamitous to the region. Moreover, Russia is facing demographic disaster. No wonder that the Organisation for Economic Co-operation and Development (OECD) has downgraded its global economic forecasts. OECD has projected higher downside risks and vulnerabilities compared to its earlier June 2015 outlook.

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