Cotton prices were held steady on Thursday due to declining free stocks on the ready market which are held by the ginners. Now only about 450,000 bales (155 kgs) are available from the current crop (August 2015 / July 2016) out of a total output of nearly 9.8 million bales this year. From this unsold stock, barely 100,000 to 125,000 bales are reported to be of better quality.
Due to vanishing cotton supply in the domestic market, some mills have entered the market to pick up some stocks as and how available. There were also reports in the market that some cotton business is also being conducted on two to three months credit basis with added premium. Cash problems and shortage of credit is being reported from the market. Business turnover has increased moderately in a steady market.
Hardly any seed cotton (Kapas / Phutti) is left from the current crop (2015 / 2016) to be sold in Sindh. In the Punjab, leftover seed cotton was said to have been offered from Rs. 2400 to Rs. 3000 per 40 kgs on Thursday, according to the quality. Lint prices in Sindh are said to have extended from Rs. 4500 to Rs. 5400 per maund (37.32 kgs) on Thursday, according to the quality. In the Punjab, cotton prices reportedly ranged from Rs. 4600 to Rs. 5500 per maund in a generally steady market.
In Sindh, new crop (August 2016 / July 2017) sowing has started in a few areas of the southern region where planting is made early. Such areas include Jhudo, Digri, Kot Ghulam Mohammad and Badin. Punjab sowing for new crop will start in another ten or fifteen days when the fields have been cleared from the remnants of the wheat crop.
The Commerce Minister Khurram Dastagir Khan said that the Texpo 2016 will go ahead as per schedule as extremist and terrorist elements cannot deter our resolve to move forward. It may be recalled that a suicide bomber killed more than seventy persons and injured hundreds more in a public park in Lahore last Sunday. The exhibition aims at building a strong business relationship between Pakistani textile exporters and textile importers all over the world. More than 400 foreign delegates have confirmed to participate in the First Texpo 2016 being held in Karachi between April 7 and 10, 2016. Delegates from Argentina, Brazil, Jordan, Kuwait, Russia, the Netherlands, Poland and China have confirmed their participation.
Some offtake in the fabric sector was reported recently, but the spinning sector is still suffering from lack of enough demand. The open end mills are still reported to be worried. Exports of textiles continue to be slow. On the global economic and financial front, analysts and observers started believing at the end of last calendar year (2015) that worst of the Great Recession (starting 2008) is over and starting from 2016 the global economic recovery will start picking up positively. In this global economic game, the United States Federal Reserve played a pioneering role by quoting sometime during the last quarter of 2015 that American economy had turned the corner and its recovery will sustain itself upwards and that interest rates need a gradual increase.
Unfortunately, that was not to be. Throughout the first quarter of 2016, the economic volatilities and susceptibilities have rose sharply giving rise to a very uncertain economic future globally. Thus Janet Yellen, the chair of the Federal Reserve, had to announce this week that increase in interest rates could take longer than expected earlier and would be gradual.
The problem with such a proposed delay in increasing interest policy is being deemed by some economic analysts being tantamount to building a credit bubble which could back fire. It may be noted here that the central banks in other countries like United Kingdom, Japan, European Union, China and others are also providing credit at lower rates including other stimuli to pull up their respective economies, mostly to no avail.
The Chinese economy, the second largest in the world, saw its slowest economic growth in 25 years during 2015. The growth momentum of the Chinese economy is reported to be waning and most steps taken to date by the government appear to have been ineffective. Other data available from China also points to a deepening slowdown in the world’s second largest economy.
The Eurozone economy, a major economic zone of the world is not faring well. It has been reported that rating agency Standard and Poor’s has cut its forecasts for the Eurozone economic growth and inflation. Indeed the matter is so serious that the rating agency has reportedly blamed a “nosedive” in financial conditions since the beginning of this year.
Besides the economic and financial challenges being faced by China and the Eurozone, several other countries are in the doldrums. After a positive beginning earlier this week, equity values soon floundered when crude oil price fell again later in the week. If Argentina remains mired in deep trouble, the recent political flare up in Brazil remains patently serious, jeopardising its economy.
The German consumer morale has fallen and would go into April, 2016. The Japanese economy also continues to show sign of faltering. Japanese factory output is the lowest since 2011 and it is feared that Japan may enter a recession. In Turkey, waves of terror continue to plague its economy. The factory output has fallen again in Thailand. Slowdown in emerging markets is adversely affecting economic performance in other regions. Waning commodity prices are weighing largely on declining economic growth globally. The world at large remains deeply entrenched in an economic malaise.