On Thursday, the domestic cotton market displayed a quiet disposition. Weakness on the New York cotton futures market, reports of bumper crop in India predicting record level of output and Chinese indecision regarding its cotton purchase policies have weakened fibre prices. Thus Pakistani cotton prices have presently come under pressure.
In other news, cotton quality in Sindh is said to have been adversely affected while the Punjab quality is improving. Lowering of cotton rates may attract mills buying. Lower yarn prices in the Chinese market are also pressing down cotton prices. Also, shortage of gas supply to mills, now particularly at the Sindh Industrial Trading Estates (SITE) in Karachi is also lowering mills buying appetite for cotton.
There are also fears that persisting hot weather may result in early boll maturation deteriorating the quality of cotton later on. These factors are also said to be instrumental in reducing local yarn prices. On Thursday the seedcotton (kapas/phutti) prices in Sindh reportedly ranged from Rs 2,200 to Rs 2,900 per 40 kgs according to the quality, while in the Punjab they are said to have extended from Rs 2,900 to Rs 3,100 per 40 kilogrammes.
Lint prices in Sindh are said to have ranged from Rs 6,000 to Rs 7,000 per maund (37.32 kgs) according to the quality, while in the Punjab they are said to have ranged from Rs 6,900 to Rs 7,100 per maund, depending on the quality. In ready sales on Thursday, 400 bales of lower quality of cotton from Mirpurkhas in Sindh sold at Rs 6,100 per maund (37.32 kgs), 400 bales from Sanghar sold at Rs 6,200 per maund, 600 bales from Nawabshah sold at Rs 6,800 per maund while 1,200 bales from Khairpur district sold at Rs 6,950 per maund in a weakfish market.
In the Punjab, 600 bales of cotton from Burewalla reportedly sold from Rs 6,825 to Rs 6,900 per maund, while 400 bales from Rajanpur sold at Rs 7,100 per maund in an easy market. Later in the evening, 400 bales each from Chichawatni and Multan sold at Rs 6,900 per maund, 200 bales from Sahiwal sold at Rs 6,910 per maund, 1,000 bales from Harunabad sold at Rs 6,900/Rs 6,925 per maund, 1,000 bales from Gojra sold at Rs 6,900/Rs 7,000 per maund, 400 bales each from Layya and Bhakkar sold at Rs 7,000 per maund while 600 bales from Mianwalli sold at Rs 7,100 per maund.
On the global economic and financial front, few individuals match the acumen and stamina of former chairman of Federal Reserve Bank of America Alan Greenspan. Therefore, we may do well to listen to what Alan Greenspan has to say about the current state of affairs of the United States economy and its monetary policy. He was chairman of the Federal Reserve for 18 and a half years.
It may here be noted that indeed Greenspan has also been partly blamed for causing the 2008 crisis. Be that as it may, he has said recently that conventional economic forecasting remains insufficient in forecasting the prevalent risk-taking practices which are quite vulnerable to dangerous bubbles and are indeed fraught with dangers of different kinds.
Greenspan has observed that the current financial system still remains risky. He has criticized the partisan behaviour of the lawmakers in the United States Congress as being quite unhelpful in solving the current fiscal crisis. In the United States, employers are reported to have added fewer jobs in September 2013 indicating that the American economy still remains feeble. Therefore, the Federal Reserve may continue its stimulus and easy money policy till the end of this year. Thus the United States economy has lost its drive upwards and a stronger economy is not seen to appear in the near future.
Fears persist in Washington that the lawmakers will again be at loggerheads with each other at the beginning of next year (2014) when considering raising the government debt ceiling again which will trim any anticipated rise in the Gross Domestic Product. In any case, the overall rise in equity values in the United States and elsewhere is contingent upon easy money providing stimulus to the share values and is not necessarily linked to any improved economic performance.
The result of the continuing joblessness and slow down in the American economy has resulted in nearly 650,000 homeless people in the United States. Moreover, in recent years more than 1.6 million children in America are suffering from poverty. None other than the US Treasury Secretary said recently that the fiscal fight fought by the American legislators has bruised the American economy.
The problem is that the state of the American economy casts its ill effects around the globe. In the Eurozone, growth in business activity has slowed down as the service sector reported negative performance. Germany has witnessed a three-month low growth. The European Central Bank is quite apprehensive regarding the health of the banking sector. It wants to review the condition of risky loans and assets and reportedly also gauge insufficient capital and other dangers which have weakened the banks. Likewise, shadow banking in China remains a disturbing issue. For the time being, most countries around the world have hardly come out from their deep and disturbing economic and financial predicaments.