The ready cotton market is witnessing a steady and stable condition due to regular mills buying in recent weeks. Due to a massive fall in the domestic cotton output during the current season in Pakistan (August 2015 / July 2016) of more than 5 million bales leaving the output to be even less than 10 million domestic size bales and reducing the quality of cotton to lower grades in a large way, now lint prices are increasing as leading mills are hunting for quality.
Thus the seed cotton prices are said to be steady in the range of Rs 2000 to Rs 3000 per 40 Kgs in Sindh and from Rs 2300 to Rs 3100 per 40 Kgs reported from Punjab, according to the quality. Likewise, lint prices in Sindh were said to have ranged from Rs 4700 to Rs 5700 per maund (37.32 Kgs) in a stable market. In the Punjab, lint prices are also said to have extended from Rs 4700 to Rs 5700 per maund on Thursday, as per quality.
From an output presently being projected to be between 9.7 and 9.8 million bales (155 Kgs) during the current season, now an estimated 1.1 to 1.2 million reportedly remains unsold in the free market. From this quantity, only about 30 percent is said to be of good quality. Most mills in Pakistan are not doing well so that a number of them are only running partially.
The stability in ready cotton prices is only related to the meager quantity of domestic cotton which remains unsold in the market. Reports in the ready market in Karachi indicated that the Pakistani mills are continuing to import cotton to meet their deficits, primarily from India and China. Lower grades of cotton imports from India have also been reported. Imports into Pakistan this year may be around 3.5 million bales.
Global cotton prices generally remain on the weak side due to massive quantities of cotton lying unsold in Chinese stocks and the strength of the US dollars. Chances are that cotton prices around the world will remain subdued due to further weakening of the global economy and softening of the commodities complex universally.
On the ready cotton market on Thursday, 800 bales from Daur in Sindh reportedly sold at Rs 5375 per maund (37.32 Kgs), while 1000 bales from Rohri are said to have been sold at Rs 5500 per maund. In the Punjab, 400 bales of cotton from Mianwali reportedly sold at Rs 5350 per maund (37.32 Kgs), 400 bales from Fort Abbas sold at Rs 5400 per maund, 1000 bales from Shujabad were sold at Rs 5600 per maund, while 400 bales from Rahimyar Khan were sold at Rs 5700 per maund, according to the quality.
Later in the evening, 200 bales of cotton from Multan were reportedly sold at Rs 5150 per maund, while 400 bales from Fakirwali and 1000 bales from Shujabad both are said to have been sold at Rs 5400 per maund. Brokers said in Karachi in the evening that cotton prices in the ready market were veering towards the tight side. Traders added that both raw cottons and also yarns were being imported from India into Pakistan.
On the global economic and financial front, weak Chinese economic activity and its ramifications have remained the prime factor affecting the financial and equity markets around the world. Chinese financial and equity markets have performed highly negatively and its economy has simply gone haywire. The recent phenomenon of large capital outflows from China have been primarily responsible to plunge Chinese stocks to a thirteen month low level. It is now estimated that the Chinese capital outflows have increased to more than a trillion US Dollars during 2015 alone.
Most industrials groups and conglomerates have slumped universally ranging from the commodity concerns to latter day technologies, and reports also indicate that a liquidity crunch in China may not be too far behind. Thus there are continuing fears that more economic difficulties are in store for China just as the reported depreciation of the Yuan and slower economic growth continues to haunt the financial markets. Worldwide surge in oil firm insolvencies is increasing the global economic gloom, including China.
Thus China's business confidence and recruitment policy were reported to have slid to record low levels in January, 2016. Reports from Moscow indicate that Russia's economy contracted by 3.7 percent in 2015. Reuters report added that "a slew of activity indicators (from Russia's economy) suggest the slump is far from over". It is difficult to imagine how Russia can extricate itself from its ongoing recession.
Japan has reported that its exports decreased largely in more than three years in December, 2015 primarily because of the slowdown in China and the emerging markets on which China has depended considerably for its exports. It is significant to note that Japan is an economic powerhouse and its economic ill health since more than two decades remains a cause of global concern. Japanese equities also fell due to a contraction in December, 2015, to a three year low level.
Germany is also suffering the same blues as China as German exports are of prime importance to their economies and the slowing down of the economies of the emerging markets will hit the German economic performance materially. Spanish bank values conceded decline which led to a general decline in European share values. Weaker mining and banking shares in Europe pulled down FTSE, the prime equity index of the United Kingdom.
United States was no different when last Monday the Wall Street was pulled down by the large declines in energy and raw material stocks. None other than the US Federal Reserve has recently acknowledged that the United States economy lost momentum at the end of 2015. Last Tuesday Shanghai stocks continued to slide more than six percent reportedly due to panic selling because of the continuing concerns regarding the Chinese economy and a continuously declining global economy.
There are also many noneconomic factors which are inhibiting the recovery of the global economy ensnared in multifarious problems from which is cannot extricate itself. For instance, the curse of corruption in emerging and several developing economies such as Russia, Iran, Egypt, Indonesia, the Philippines, China, Brazil, Turkey, India, Indonesia, Italy, South Africa, Saudi Arabia, South Korea, Spain, Greece and several others. Then we must note that the prevailing global refugee crisis is the largest refugee crisis to hit the world since the end of the World War-II in 1945.
The upshot of all these reports and comments is that most countries around the world are facing a drag in their economies and the current year (2016) promises to enhance the recessionary tendencies and keep them accelerating. Thus at present there appear no notable signs and signals that the global economy can rehabilitate itself in the foreseeable future.
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