Improved demand since a couple of days has resulted in better cotton prices as mills picked up their ready requirements of lint from the market. Both seed cotton (Kapas / Phutti) and lint prices increased at midweek following some recent rains in the cotton belt and a slightly lower production estimate of the current crop (August 2014 / July 2015).
Seed cotton prices in Sindh reportedly ranged from Rs 1700 to Rs 2300 per 40 Kgs, while in the Punjab they are said to have prevailed from Rs 1900 to Rs 2500 per 40 kilogrammes, as per quality. The prices of lower quality of seed cotton were said to have increased by Rs 100 per 40 Kgs in both Sindh and Punjab.
Lint prices were increased by Rs 50 to Rs 100 per maund (37.32 Kgs) in both Sindh and Punjab. Thus on Wednesday lint prices in Sindh reportedly ranged from Rs 3800 to Rs 5000 per maund (37.32 Kgs), while in the Punjab they are said to have extended from Rs 4500 to Rs 5100 per maund. However, yarn prices remained relatively weak and dull in a tight money market.
According to the latest seed cotton (Kapas / Phutti) report issued by the Pakistan Cotton Ginners Association (PCGA) regarding arrivals upto the 1st of February 2015 for the current crop (August 2014 / July 2015), the total country wide arrivals were 14,435,202 lint equivalent bales (about 155 Kgs) from which the mills lifted 12,563,212 bales. The exporters bought 446,346 bales which ginners are carrying an unsold stock of 1,330,744 bales with them in both pressed and loose form.
The traders generally believe that production during the current cotton crop in Pakistan should range anywhere from 14.5 to 15 million domestic size bales. The domestic mills will need 15 to 15.5 million bales during the current season (2014-2015). Exporters could ship half a million to 750,000 bales while imports during the season could range from one to 1.5 million bales.
In ready sales of cotton on Wednesday 600 bales of cotton from Pano Aqil were reportedly sold at Rs 5000 per maund (37.32 Kgs). In the Punjab, 400 bales from Vihari were said to have been sold at Rs 4675 per maund, 800 bales from Harnuabad sold at Rs 4700-Rs 4750 per maund, 1500 bales from Bahawalpur sold at Rs 5000-Rs 5100 per maund, 1000 bales from Sadiqabad and 1200 bales from Khanpur sold at Rs 5050-Rs 5100 per maund, while 3000 bales from Rahimyar Khan sold at Rs 5100 per maund. In the evening cotton prices increased due to higher demand. Thursday (5 February, 2015) is a public holiday in Pakistan due to Kashmir Day.
On the global economic and financial front, the Eurozone economy remained in focus due to continuing poor performance in the peripheral economies like Greece, Spain and Portugal and also weaker outlook in Italy. However, the main focus remained on Greece which is dragging down the entire Eurozone.
The problem with Greece is that Greece's current credit agreements with the so-called "troika", viz the European Union, European Central Bank and the International Monetary Fund (IMF) expire on February 28, 2015 whereafter the recently inducted Greek Prime Minister Alexis Tsipras Government would default unless the agreements are extended. Desperate talks between Greece and its prime creditors are continuing post-haste to avoid any calamity in Greece which in turn could not only bring down the single currency zone but also go universally viral.
As it is, the Eurozone factories posted only a nominal growth in January 2015. This meagre growth has been termed as disappointing. With a tottering economy in Greece and other peripheral countries, doubts about the viability of continuing a single currency experiment have increased and the future of the Eurozone remains contentious at best. Reports indicate that "Greece has started negotiations with the International Monetary Fund over a plan to swap its foreign debt for growth-linked bond", as stated by finance minister Yanis Varoufakis.
In a Reuters report from Washington D.C following the unveiling of dollars four trillions budget by Barack Obama, it has been noticed that inequality in American society is deep-rooted and the economy is growing painfully slowly which is not rewarding the workers adequately. Inflation in the economy remains weak. Some analysts believe that America could remain mired in a prolonged period of stagnation.
New orders for US factory goods fell for a fifth straight month in December "(2014)", as per Reuters. "In fact the Commerce Department stated that new orders for manufactured goods declined 3.4 percent as demand fell across a broad sector of industries". The US consumer spending was said to be weakest in December 2014 since 2009.
There are other countries around the world which are facing adverse economic conditions. Australia is reported to be suffering from a patch of weak economic growth. Russian banks are said to be in a precarious condition while its currency is floundering. Russia's credit rating has already been relegated to junk status. The overall economic mood is glum in Japan.
In Singapore, the factory activity contracted for a month in January 2015. Thus it remains amply clear that global growth and economic restitution remain a distant dream. Chances of another global recession remain patently possible under the poor prevailing economic circumstances.