Due to relatively low sowing of the new cotton crop (August 2016 / July 2017) in Pakistan following large losses suffered by the growers in the last season (2015/2016) due to low output and also decreased selling prices, production for the new crop is presently being estimated to range from 11.5 to 12 million bales (155 kgs), which is lower than the official targets announced earlier. Cotton consumption may provisionally be projected between 14.5 to 15 million bales (155 kgs) during the 2016 / 2017 season. Therefore, a shortfall of about 2.5 to 3 million bales of cotton (155 kgs) may occur during the incoming season (2016 / 2017). It is presumed that most of it will be imported by the domestic mills to meet the deficit. Cotton sowing in 2016 / 2017 is said to be lower by 21 percent compared to the previous season.
Prices of cotton have mostly been low and depressed since the beginning of the current season but have picked up over the last two or three months. This week prices remained very volatile and after having improved earlier in the week, they are now again said to be subdued. After remaining firm at the beginning of this week, cotton prices have again gone down following reported decrease of lint prices in China and India.
In the evening, lint prices in Sindh reportedly decreased to range between Rs 6,500 (or, USC 75.50/lb) to Rs 6,550 per maund (37.32 kgs) (or, USC 76.00/lb), while in the Punjab they are reported to be prevailing between Rs 6,700 (or, USC 78.00/lb) to Rs 6,750 per maund (37.32 kgs) (or, USC 78.50/lb) in a relatively weaker market on Thursday. Cotton prices could go down another Rs 100 per maund over the coming days. Presently about 100 to 125 ginning factories are reported to have started pressing the new crop (2016 / 2017) in Pakistan. Some damage to Punjab cotton is being reported but any damage in Sindh due to prevailing weather / rain is not much till now.
Due to high cost doing business, Pakistani yarns mostly remain incompetitive in the global markets. Seed cotton (Kapas/Phutti) prices in Sindh are said to have ranged lower from Rs 3100 to Rs 3200 per 40 Kgs, while in the Punjab they extended from Rs 3100 to Rs 3300 per 40 Kgs on Thursday. Seed cotton arrivals have slowed down since the last few days due to rains in the cotton belt. Early reports say that the condition of the cotton crop in Sindh is better than that prevailing in Punjab but no major setback has been reported till now.
On the global economic and financial front, most economies are still struggling to survive a serious downturn though a few of them are barely able to sustain themselves. If we rely on The Conference Board, a global research group organisation, “the global economic growth remains modest at 2.4 percent in 2016 and at 2.7 percent in 2017”.
It has thus been discerned by the Conference Board that the American economic growth remains subdued. Indeed the GDP growth of the United States has been adjusted downwards to 1.7 percent for 2016 due to a weak GDP during the first quarter. Infested with political, social and security risks, the economic growth remains very vulnerable in the Eurozone area, particularly following the Brexit phenomenon. Problems relating to relentless arrivals of migrants and rising radicalism are adding woes to the socio economic future of Europe.
It is now several years that the Chinese economy is slipping. Growth rates are under stress in China where banking and property markets are deemed to be vulnerable. Thus it appears premature to presume at present that China can make any remarkable economic recovery in the foreseeable future.
Indian economy is generally deemed to be more stable than that of China but any meaningful economic growth in India does not appear likely in the near future. Indeed any increased economic growth in India during 2016 is not anticipated compared to the level of 2015.
Largely fall of demand and decrease in prices of oil and other commodities have hit the economies hard in Brazil, Australia, Venezuela, the Middle East, Nigeria, China and South America so that these countries continue to remain in the doldrums economically. Indeed the leading economies of the world have been advised by the International Monetary Fund (IMF) and America that the G20 countries which recently met at Chengdu in China to do much more to boost the global economy which is slowing down. Central bank chief and finance ministers from the world’s top twenty economies were urged by United States Treasury Secretary Jacob Lew that we are passing through “a time of continuing uncertainty in the global economic outlook”. Lew added that “when you look at the political developments around the world, most recently the referendum in the United Kingdom, It really reinforces the importance of concentration on shared growth”.
It is thus amply clear to comprehend that the global economic growth continues to remain weak and the downside risks have become pronounced.