In line with the global trend of rapid rise of cotton prices, domestic lint prices for the incoming crop (2016/2017) are also moving up sharply in tandem. Lint prices in the domestic market have thus risen by Rs 200 to Rs 300 per maund (37.32 Kgs) within this week. Seed cotton prices have also moved up by Rs 100 to Rs 150 per 40 Kilogrammes.
In Sindh, seed cotton prices (Kapas / Phutti) for the 2016 / 2017 crop are said to have ranged from Rs 3000 to Rs 3250 per 40 Kgs on Thursday, according to the quality. Seed cotton prices from Punjab were also tight and reportedly ranged from Rs 3000 to Rs 3350 per 40 Kilogrammes. Lint prices in Sindh for the incoming new crop (August 2016 / July 2017) are said to have ranged from Rs 6300 to Rs 6350 per maund (37.32 Kgs), according to the quality. In the Punjab, pressed cotton prices reportedly ranged from Rs 6400 to Rs 6450 per maund, as per quality.
The new cotton crop (2016/2017) is reported to be in normal shape till now and may yield up to 12 million bales (155 Kgs). Sowing of the new crop is said to be about 15 percent less than the previous season (2015/2016) due to losses incurred by the growers because of lower yields, decreased prices of cotton and slow off take. Acreage in certain cotton growing areas has reportedly shifted to sugarcane and maize crops.
Traders said in Karachi that New York cotton futures have risen by about seven cents per pound. The prices for the frontal months of ICE futures cotton contract 2 were said to be hovering between 73 and 74 cents per pound, a level not seen since nearly six years. In India cotton prices are said to have risen by Rs 12,000 per Kandy and are prevailing around Rs 45,500 per Kandy which were obtaining between Rs 34,000 and Rs 35,000 per Kandy (356 Kgs) about six weeks ago. The price of Chinese cotton has also risen over the past four weeks. There is reported to be shortage of cotton in USA and India compared to their rising consumption.
In ready business on Thursday 1000 bales of cotton from Mirpurkhas and 1200 bales from Tando Adam in Sindh both sold at Rs 6300 to Rs 6350 per maund (37.32 Kgs). In Shahdadpur 800 bales sold at Rs 6350 per maund. In the Punjab, 200 bales from Burewalla reportedly sold at Rs 6450 per maund in a very tight market.
On the global economic and financial front, few prospects of any material improvement can be foreseen. In fact, the crawling global economy could well bog down seriously into a slough of despond during 2017 and beyond. Indeed the World Bank has cautioned that prospects of economic growth have weakened throughout the global economy. The World Bank has added to say that the Emerging markets and the developing economies are confronting stronger headwinds in the face of lower commodity prices and even most of the advanced economies are faring no better. Global trade slowdown is reported to be worse than thought earlier.
The Brexit, or the recent referendum result in Britain deciding to opt out of the European Union , is not only likely to weaken the European financial setup, particularly the faltering banks in Italy, it is likely to initiate a global financial crisis.
The Bank of England's Monetary Policy Committee (MPC) is reported by the CNBC to have met on last Wednesday for the first time after the Brexit referendum. There is speculation in the market that the MPC may reduce its benchmark interest rate by 25 basis points to 0.25 percent which would be the banks first initiative since it cut rates to 0.5 percent from one percent in March 2009. The United Kingdom continues to portray a weak growth profile. Some see the necessity of giving more stimulus to the economy of the UK by providing further quantitative easing in the market.
China's exports in June, 2016 fell much more than expected earlier, while imports also declined much more than predicted earlier as the mainland's factory performance slipped lower. The exports are said to have fallen by 4.8 percent year on year while the imports went down by 8.4 percent. Thus Chinese trade slipped sizably in June, 2016.
Japan remains captive in an economic slowdown since more than two decades. In spite of large doses of quantitative easing provided to the economy several times, the private consumption continues to remain very poor and thus the economy keeps stumbling. It has been reported that any firming of the prices outlook remains elusive. Thus the quarterly Tankan business survey has indicated that the "Japanese companies are said to have lowered their business forecasts for the fourth consecutive time.
According to the Brookings Institution in Washington D. C, "with a number of elections now underway in Europe and the United States, populist politicians are gaining with the lingering effects of the global financial crisis and the Europe with mounting fears of terrorism, concerns surrounding record levels of migration and growing doubt of the political elite's abilities to address these and other crises. Brookings is holding an event on July 14, 2016 to discuss the future on a publication by David Drezner titled "Five Known Unknowns about the Next GenerationGlobal Political Economy". The verdict appears to be that the existing socio economic and political order has failed globally.
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