With the depletion of the cotton stocks from the current season (August 2015/July 2016) to negligible numbers and arrivals of new crop (August 2016 / July 2017) not foreseen before the Eid-ul-Fitr holidays in higher quantities, domestic lint prices have reportedly risen by Rs 200 to Rs 225 per maund (37.32 Kgs) within a fortnight. Higher quality lint from the new crop from Punjab even increased upto Rs 300 per maund.
The prices of new crop (2016/2017) seedcotton from Sindh reportedly ranged from Rs 3200 to Rs 3250 per 40 Kgs, while in the Punjab they were said to have extended from Rs 3100 to Rs 3300 per 40 Kilogrammes. The Trading Corporation of Pakistan (TCP) is said to have sold 73000 bales of cotton from the 2014 / 2015 crop within the past one month or so. Over the past couple of days, TCP reportedly sold 35000 bales at prices ranging from Rs 5985 to Rs 6060 per maund. TCP thus is said to have a remaining stock of 11,000 bales left.
Cotton prices have remained tight in India, China and the United States, though lint prices in the US have pared some of their gains recently. India is said to have imported 700,000 to 800,000 bales of new crop recently. Yarn prices are also said to have gone up locally following the rise in cotton prices. Thus the current cotton crop (2015/2016) from Sindh is said to have sold between Rs 4800 to Rs 5800 per maund (37.32 Kgs), while the prices for lint from Punjab reportedly ranged from Rs 5400 to Rs 6000 per maund. New crop cotton from Sindh was said to have been sold from Rs 6000 to Rs 6050 per maund, according to the quality, while the price of new crop from Punjab was reported to be Rs 6100 per maund.
Lint prices have tightened locally as most of the remaining quantities from the current crop (2015/2016) have been sold out except for small numbers. New crop (2016/2017) in Pakistan is presently arriving in very small quantities. Larger cotton arrivals from the new domestic crop may start later in the middle of July, 2016 following the Eid-ul-Fitr holidays.
In Pakistan it is estimated that 15 to 20 percent less sowing of the cotton has been made for the 2016/2017 season compared to the previous season. Indian crop during 2016/2017 will also be less due to lesser sowing being reported by seven percent.
The Karachi Cotton Association has strongly opposed the demand of APTMA (which appeared in press on 21-06-2016) for banning export of Raw Cotton (to India). Expressing its serious concern, the KCA is of the view that any decision to ban export of raw cotton (specific or general) would negate the declared policy of free trading in cotton being followed very successfully since past 20 years in order to safeguard the interest of all the stockholders of the cotton economy including the cotton growers.
The KCA has always advocated free trading policy in cotton ie free export and import of cotton without any quantitative and qualitative restrictions to ensure international price of cotton to the Pakistani growers and provide a level playing field to all sectors of the cotton economy.
On the economic and financial front, the leading news this week concerned the warning issued by the International Monetary Fund (IMF) to the United States over high rate of poverty and inequality prevailing in the country which continues to rise and is very worrisome. According to the IMF in Washington, such conditions warranted that the economic growth results in America be reduced from 2.4 percent forecast at the beginning of the year to 2.2 percent now.
Though American economy has generally shown ample resilience on several occasions, yet it is feared that global volatility could block the possibilities to future growth in case the increase in high level of poverty and growing in equalities in society remain. Tumbling productivity and absence of desired investment may stall American economic growth.
IMF added that 46.7 million people, including children, are living in poverty in America, from which twenty percent are children. IMF fears that if the fall in economic growth goes inadequately attended, it will increase social strains, decrease labour force participation and also undermine the investment in education and health sectors in America.
In the Eurozone, after picking up growth during the first quarter of 2016, the economy has slowed down during the three months ending in June, 2016. After making modest recovery over the past three or four years, the Eurozone again has undergone a period of slow growth during the second quarter of 2016. Moreover, lowering inflation and the fear of Brexit has kept private investment in abeyance. The Wall Street Journal has reported that United Kingdom was the Eurozone's second largest export market after the US during 2016.
Of prime interest to investors, economic planners and financial watchdogs around the world has been the speculation following the referendum in the United Kingdom on the 23rd of June, 2016 when the voters will decide if Britain would remain in the European Union or leave it. Results of the vote were expected on Friday morning.
Leaders from United States like Barack Obama to Germany's Frau Merkel and France's Francois Hollande, and of course Britain's prime minister David Cameron and several other leaders around the globe have called for the UK to remain in European Union which would benefit everyone. It is a universal truth that the global economy is still in the doldrums and Brexit would shatter any pending hopes for its early recovery.
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