The domestic cotton market has mostly remained slow and subdued during the past couple of weeks. An estimated 15,000 bales of new crop cotton (August 2015 / July 2016) has been pressed by the ginners, mostly from Sindh but also from Punjab, which has been practically sold out to the mills. Reports indicate that sowing of the new crop in Pakistan has been good and hot weather in the previous weeks has been helpful so that the quality of lint has been of good grade.
The general price idea of seedcotton (Kapas / Phutti) for the new crop (2015 / 2016) in Sindh has been reported from Rs 2450 to Rs 2500 per 40 Kgs, while in the Punjab the seedcotton prices are said to have ranged from Rs 2500 to Rs, 2600 per 40 Kgs, according to the quality.
Lint prices of new crop cotton from Sindh are said to have ranged from Rs 4950 to Rs 5000 per maund (37.32 Kgs) as per quality, while in the Punjab they reportedly ranged from Rs 5100 to Rs 5200 per maund in a slow moving market.
Yarn prices are very weak and the Pakistani mills are reported to be very worried. Mills sources said that there is a massive slowdown in mills functioning. Earlier in the week, Chairman of the All Pakistan Textile Mills Association (APTMA), S. M. Tanveer stated that his Association had decided to "voluntarily" close down the textile industry due to the sizeable losses it has been suffering. Tanveer added that an emergent meeting of APTMA was held who found that running the textile industry partially was not feasible as it incurred more losses. He further added that the cost of doing business in Pakistan has shot up tremendously. Moreover, the burden of incidental taxes, provincial cessn system insufficiencies and the punitive withholding tax regime are disastrous.
In ready business of new cotton crop, 100 bales of cotton from Hyderabad in Sindh and 200 from Kotri, both sold at Rs 4950 per maund on Thursday.
According to the International Cotton Advisory Committee the world cotton area in 2015/16 is projected down 6% to 31.3 milion hectares, due largely to lower prices in 2014/15. Assuming a world average yield of 764 Kg/ha, production could reach 23.9 million tons, down 9% from 2014/15. China's cotton area is forecast to decrease by 12% to 3.8 million hectares, and production down by 16% to 5.4 million tons in 2015/16. While low cotton prices during 2014/15 in India are expected to cause cotton area to decrease by 5% to 11.6 million hectares in 2015/16, falling prices for competing crops and a modest increase in the minimum support price may forestall a greater decline. The Indian monsoon arrived earlier this year compared to 2014/15, and yields may improve 3% to 547 Kg/ha, limiting the decrease in production to 6.4 million tons. Low International cotton prices have limited farmer enthusiasm to plant cotton, and area in the United States may contract 15% to 3.3 million hectares. Production is forecast to decline by 12% to 3.1 million tons. Area in Pakistan is projected to contract 6% to 2.7 million hectares due to low domestic prices in 2014/15, and production is expected to decrease 11% to 2.1 million tons.
On the global economic and financial front, all eyes were on Greece where defiant prime minister Alesix Tsipras pleaded to his countrymen last Wednesday to reject an international bailout deal concerning the offers being made be by topnotch lenders like the International Monetary Fund (IMF) and the European Central Bank (ECP) and other leading entities like the European Commission . Thus Greece became a defaulter of the IMF on Tuesday creating more chaos in the country. It may be noted that Greece is the first defaulter of an advanced country on the economic front.
The inability of Greece to repay a scheduled 1.6 billion Euto loan to IMF after last minute takes talks with the topnotch troika could not break the deadlock. In the meantime, the membership of Greece in 19 National Euro currency Grouping remains in the doldrums. Another event in this tragic drama will be the scheduled role in the referendum on next Sunday whether the country should accept the formidable austerity terms being faced by its citized to become entillens to continued international aid.
Even before the actual default of Greece by failing to repay its collosal debts owed by it, more particularly to IMF on last Tuesday, equities in the United Kingdome fell to a five and half month low level due to poor performance by miners and supermarkets in the United Kingdom. Furthermore, weak exports added to investor gloom in Great Britain. Moreover, earlier in the week, due to fears of a Greek default, the leading markets in Europe slumped sizeably in a mood of fear and desperation of the impending Greek fiasco. All markets from Frankfurt to Paris and from Rome to Madrid fell sharply.
Moreover, early during the week, United States stocks also plummeted as fearful investors were seriously concerned what they construed as a disaster in the waiting not only for Greece but also along rest of the world which could possibly bring an unparalleled calamity to most of the world. Reports from New York indicated that Standard and Poor's and Dow Jones had their worst day since October, 2014.
Moreover, other economic worries in the Eurozone related to a slowing of inflation in June, 2015 despite unprecedented stimulus measures which are being provided by the European Central Bank. As its is, it was reported from Brussels that the Eurozone suffered four months of deflation earlier this year which signifies that besides the interminable economic woes of Greece, hopes were shattered regarding any meaningful recovery would be seen in the Eurozone and the economy of the 19 country currency bloc will be forthcoming anytime soon. Moreover, the German unemployment figure is said to be stuck at historically low levels.
Then the reports of unexpected decline in Canadian economic growth in April, 2015 has put its second quarter growth at risk. Thus the second quarter performance of Canadian economic growth may shrink further.
Globally speaking, from the Greek economic tragedy to the low performance in the Eurozone, the fear of shadow banking and risky loans provided by China and the overall global resistance to rebound to healthier economic performance, the global economic condition remains very vulnerable and uncertain.
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