With depleting stocks from the current season (August 2014/July 2015) leaving only 125,000 to 150,000 unsold bales in the market, lint prices were firm to steady this week. Despite weaker advices from New York and India, domestic cotton prices were mostly held tightly. Meaningful arrivals of new cotton crop may take another six to eight weeks, therefore meager quantities of new crop (August 2015/July 2016) are being sold for forward deliveries.
Almost all the seedcotton (kapas/phutti) from the current season (2014-15) has been sold out. Lint values from the current crop are being tightly held. Thus lint from Sindh is said to being sold from Rs 4,400 to Rs 5,500 per maund (37.32 kgs), according to the quality, while lint from Punjab is reportedly sold from Rs 4,900 to Rs 5,600 per maund in a steady to firm market.
Good mills in Pakistan are mostly covered for their requirements. However, cotton sales by mills to other mills is being reported. Moreover, some cotton exporters are also selling their surpluses to the needy local mills. In ready sales of current cotton crop, 400 bales from Vihari sold at Rs 4,900 per maund (37.32 kgs), 400 bales of Punjab cotton sold by an exporter to a mill at Rs 5,400 per maund, 400 bales from Burewalla at Rs 5,800 per maund on ready basis, 400 bales from Yazman Mandi and 1,200 bales from Burewalla on credit at Rs 5,800 per maund each.
A forward sale of new crop (2015-16) seedcotton (kapas/phutti) from Sanghar in Sindh reportedly took place at Rs 3,000 per 40 kgs for delivery 25/30 June, 2015. A couple of factories may start ginning new crop in the beginning of July, 2015.
Two hundreds bales each of new crop (2015 / 2016) cotton from Burewalla and Muridwalla have sold at Rs 5,600 per maund for delivery on July 10, 2015 while 200 bales from Toba Tek Singh sold at Rs 5,700 per maund for delivery on 15 July, 2015.
Legislation has been passed to impose the Gas Infrastructure Development Cess (GIDC) which has been vehemently criticised not only by the trade and industry but also by leading political parties who complain that it will put a heavy burden not only on businessmen at large but will also burden the poor people. The GIDC is being imposed to build the infrastructure for the gas supply lines from Iran, Turkmenistan, Afghanistan, Pakistan and India (TAPI).
The GIDC project is said to be politically controversial where some federating units are opposed to it. Be that as it may, the cotton economy including the textile industry will get worse and suffer immensely, besides other industrial sectors. The cost of producing textile products will rise steeply as energy costs will rise sharply. Thus the All Pakistan Textile Mills Association (APTMA) and other trade bodies are opposing the imposition of GIDC strongly.
On the global economic and financial front, after rise in equity values during the first half of the week, the equity values again receded in the beginning of the second half of the week. Red colour was splashed on mostly all the boards around the world. There is speculation that the United States Federal Reserve has run out of most of its items from its bag of tricks and the American economy is heading towards further trouble. Indeed the mega investor and a credible soothsayer Donald Trump has been reported to have warned the Americans of an impending "Financial Ruin".
Indeed Donald Trump has been quoted by Newsmax Wires as saying that "The United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin". Trump is said to have added that the United States is no more a rich country and is a sizeable debtor to China and some other countries. In this regard, Donald Trump reportedly said "We are going up to Dollars 16 trillions (in debt) very soon, and it is going to be a lot higher than that before he gets finished. When we have (debt) in the dollars 21 or 22 trillions, you are talking about a downgrade no matter how you cut it."
Trump fears that monumental debts or the downgrade in financial status are not the only American financial worries, the true unemployment rate in the United States is much higher than it is made out to be. It is 15 or 16 percent, while some observers make it out to be close to 21 percent.
Another economist Robert Wiedemer believes that the American economy is a bubble economy which may burst any time in the foreseeable future. In his recent book " Aftershock", Wiedemer does not mince words and foretells that "The data is clear, 50 percent unemployment, a 90 percent market drop, and 100 percent annual inflation ......... starting as soon as next year."
In another financial bombshell, a New York report filed by AFP informs that six top banks have been fined dollars six billions for foreign exchange manipulation in the United States and the United Kingdom. AFP adds that the "US and British regulators fined six major global banks a total of dollars 6 billions between them Wednesday for rigging the foreign exchange market and Libor interest rates."
The truth of the matter is that these banks met regularly online to set foreign exchange rates which cheated the customers while filling their own coffers in a massive foreign currency market. The shame of it is that these banks which form the apex of the global banking system have set a bad example for the industry. With these fearsome news, it is doubtful to see if any meaningful global economic recovery will be forthcoming in the foreseeable future.
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