After rising continuously since the beginning of this month posting an increase of nearly Rs 700 to Rs 800 per maund (37.32 Kgs), lint prices have conceded a loss reported to range from Rs 100 to Rs 150 per maund (37.32 Kgs) over the past coupCe of days. Stronger US Dollar and slow Chinese buying are also reported to have influenced domestic cotton prices on the lower side. Selling of cotton by the Cotton Corporation of India and decrease in cotton prices in the International market also influenced the reduction of cotton prices.
On Thursday, seedcotton prices decreased by Rs 50 per 40 Kgs and are said to have ranged from Rs 3000 to Rs 3350 per 40 Kgs in Sindh and are reported to have extended from Rs 3000 to Rs 3450 per 40 Kgs in the Punjab, according to quality. Lint prices suffered a decrease of Rs 100 to Rs 150 per maund (37.32 Kgs) over the past couple of days. In Sindh they are said to have ranged from Rs 6650 to Rs 6700 per maund (37.32 Kgs), while in Punjab they obtained from Rs 6800 to Rs 6900 per maund on Thursday. Yarn prices are also said to be under some pressure due to slow buying from China.
On Thursday, about 12000 bales (155 Kgs) were said to have been sold by the ginners to the domestic mills. Due to rise in Cotton rates in recent weeks due to increasing demand by the domestic mills, growers are said to have increased their asking prices. However, domestic mills are reported to be reasonably covered for their immediate need of cotton. Though International prices of cotton have declined in recent weeks, the general price tone of cotton is being described as stable.
Over the past couple of weeks, weather pundits have forecast heavy rains. However, rains received on the cotton belt have been mostly tolerable till now. Textile circles are complaining that their yarn prices are not competitive at the current cotton rates, even though yarn rates are reported to have risen in recent weeks.
Traders said that with cheaper inputs like pesticides and fertilisers and higher cotton prices, the growers have gained an incentive to grow more cotton and take better care of their cotton crop and hopefully attain higher output of cotton. On the global economic and financial front, equity prices have mostly risen to record levels if we take the leading share indices as a guide. No doubt the Brexit vote in the UK referendum held last month cast a pall of gloom on most equity and commodities markets. Earlier, the Brexit decision by the UK voters was deemed and described as a spanner in the works which was deemed to be in the offing in the global economy.
European Central Bank president Mario Draghi stated on Thursday that Brexit vote had added headwinds for the eurozone economy but it remains "too early to say what is going to be the final impact" of Brexit. Draghi had earlier identified Brexit as a key risk that could wipe off 0.5 percentage points off the eurozone economic growth over the following three years. European stocks were reported to have traded lower after the European Central Bank (ECB) left its key interest rate unchanged.
Eurozone is still believed to be limping economically not only because the equity markets are said to be anticipating further monetary policy stimulus as Mario Draghi has indicated but because Draghi has hinted to provide more stimulus in September, 2016 to keep the eurozone economy on a stable footing. In may not be deemed necessary that Brexit would necessarily bring down the European economy positively. A meeting held this week between the new British Prime Minister, Theresa May and German Chancellor Angela Merkel in Berlin has assuaged fears that article 50 would not be triggered immediately to push the Brexit instantaneously. Indeed prime minister has expressed her desire to continue to keep closest possible economic relationship with Germany after the Brexit. May further clarified that the UK is leaving the European Union but is not snapping its traditional friendly ties with Europe.
Besides the Brexit imbroglio, there are other parts of the world which are still struggling to mend their sliding economies. The Chinese economy is seen in a fix due to its floundering banking system. Besides China, the International Monetary Fund (IMF) has issued its important but extraordinary statement reportedly stating that "among the globally systemically important banks, Germany's Deutsche Bank is the leading contributor to the global systemic risk followed by HSBC in the UK and Credit Suisse."
Radical attackers in Europe, the United States, Middle East and Africa have shattered the socio economic fabric around the world as fear continues to grow and penetrate the body politic of human society. The failure to control millions of uncontrolled immigrants around the world is also eroding legitimate economic enterprise to flourish. Therefore it is difficult to imagine presently that global economic growth will resume any time soon.
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