Cotton prices continued to rise sharply this week on continuous fears that the current crop (August 2015 / July 2016) is much shorter than envisaged earlier. Some observers put it as low to range between 12 and 12.5 million bales (155 kgs) and the quality of cotton has also said to have suffered notably. Mills may consume anywhere from 14.5 to 15 million bales and may also have to import 1.25 to 1.50 million bales. Exporters could ship anywhere from 700,000 to 800,000 bales.
A rise in seed cotton (kapas / phutti) of Rs. 300 to Rs. 400 per 40 kgs has been recorded and the prices of cottonseed (Binola / Kakra) and oilcake (Khal) have also risen commensurately. Similarly, lint prices are also said to have shot up by Rs. 300 to Rs. 400 per maund (37.32 kgs) since the beginning of this week. Traders added that due to rise in local cotton prices a parity has been reached to import cotton at commensurate rates. Thus some Pakistani mills are reported to have booked cotton for import from India, West Africa and Brazil.
Generally speaking, seed cotton prices are said to have ranged higher from Rs. 2,600 to Rs. 2,900 per 40 kgs, according to the quality. Lint prices on Thursday are said to have ranged from Rs. 4,850 to Rs. 5,400 per maund (37.32 kgs) in Sindh, while in the Punjab they were said to have extended from Rs. 5,200 to Rs. 5,400 per maund in a tightly held market.
In ready sales in Sindh on Thursday, 400 bales of cotton from Bhiria Road reportedly sold at Rs. 5,250 per maund (37.32 kgs), 2,000 bales from Khairpur sold at Rs. 5,300 / Rs. 5,350 per maund, while 1,000 bales from Upper Sindh were said to have been sold at Rs. 5,350 / Rs. 5,400 per maund.
In the Punjab, 400 bales of cotton from Lodhran were said to have been sold at Rs. 5,300 per maund, while 400 bales from Mianwali sold at Rs. 5,400 per maund. Domestic mills have become eager buyers of cotton even though the prices of cotton have become firmer due to crop shortage in the country. Traders added from Karachi that cotton exporters are also buying in the market.
According to the Pakistan Cotton Ginner's Association (PCGA) seed cotton arrival report for the current season (August 2015 / July 2016), 3,073,325 lint-equivalent bales arrived into the ginning factories till the 1st of October, 2015 from which the domestic mills have lifted 2,212,900 bales. Exporters have picked up 230,190 bales while the ginners still hold an unsold quantity of 630,235 bales, both in loose and pressed form.
A new Executive Committee of the Karachi Cotton Association (KCA) has been elected for the year 2015 - 2016. Khawaja Tahir Mahmood is the Chairman, Khawaja M. Zubair is the Senior Vice Chairman, Syed Muhammad Sameer is the Vice Chairman. Other committee members are Ahmed Ebrahim, Anwar Haji Karim, Mohammad Atif Dada, Jahangir Moghul, Nadeem Maqbool, Amir Javed, Muhammad Khalid, Rizwan Iqbal Umer, Sohail Naseem, Waqas Anwar, Rehan Shoukat, Wahid S. Balagamwala and Amin A. Hashwani. The Government members of the Executive Committee include Abdul Karim Memon, Mrs. Naheed Ishaq and Dr. Khalid Abdullah.
On the global economic and financial front, the current calendar year (2015) started with high hopes that recovery from the Great Recession which started in 2008 would somehow begin in a definitive manner. Now in hindsight it is clear that was not to be. Indeed new fears have arisen as not only no tangible recovery has been achieved but instead it is feared that the global economic downslide may extend to 2016 and beyond.
Equity markets fell early this month when the details of the United States jobless numbers were released. It was announced that the U.S. economy added only 142,000 jobs in September, 2015. Not only the total number of people employed fell, it was also reported that even more people left the labour market. Under these circumstances coupled with other difficulties being faced by the United States, it appears that any increase in the interest rates is likely to be postponed till 2016. Bloomberg has reported that China is said to be selling its U.S. debt to support its currency thus giving more financial clout to China which is gaining more influence in global currency markets than the U.S. Federal Reserve.
Before the recent rise in commodity prices following a prolonged and deep plunge in commodity values, many economic sectors around the globe suffered serious financial problems. For instance, Saudi Arabia, Iran, Venezuela, Australia, Brazil started feeling a credit crunch which has been partly averted due to a partial rise in commodity prices.
Moreover, it has also been reported that the Eurozone business growth has fallen to a four-year low level. Referring to China, the International Monetary Fund (IMF) states that China faces a formidable challenge in its decision towards a more market and consumption - based economy. China thus faces a serious task in order to move towards a market - based economic model.
On its part, the Organisation of Economic Corporation and Development (OECD) has been quoted from Aris by Reuters as saying that the financial crisis of 2007 - 2008 has heightened the economic inequalities the ill effects of which will be felt in some European countries for decades to come. It is thus feared that austerity measures in such southern European countries like Greece, Italy and Spain may hurt the education sector for a whole generation.
The International Monetary Fund (IMF) has thus observed that "tumbling commodity prices will push global economic growth this year to its lowest level since the recession year 2009" as reported by the Associated Press. The IMF said that the world economy will grow at the rate of 3.1 percent this year, down from a July forecast of 3.3 percent and from 3.4 percent last year. It may be added here that the current year (2015) has been a horrible year for the global economy and the downslide is poised to continue. The adverse conditions will provide added risks to global financial stability.
Reports of sharp slowdown have also been reported in German exports. In the meantime, the Deutsche Bank has reported a big loss as it is embroiled in many problems said to range from Libor - rigging scandal to price - fixing on the precious metals market.
In recent years the global equity markets went through rising levels of unprecedented nature due to monetary easing of historical scale in the USA, Europe and China. Now it is feared that shares prices could shrink sizably as corporate profits are reportedly slumping in the emerging economies from China, Asia - Pacific to Brazil.
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