Since the past few days, the domestic cotton market has passed through a quiet and mostly inactive phase. Market weakness and many financial and operational difficulties of the Pakistani textile industry, besides the continuing global economic gloom and the decreasing prices on the cotton futures market in New York, are also pressing local fiber and textile prices. Thus on Thursday the ready cotton market remained very quiet with hardly any reported enquiries.
The prices of seed cotton (Kapas/Phutti) in Sindh generally were said to have ranged from Rs 1500 to Rs 2700 per 40 Kgs, as per quality. In the Punjab, seed cotton prices reportedly ranged from Rs 1800 to Rs 2800 per 40 Kgs. The prices are about Rs 100 to Rs 200 per 40 Kgs lower compared to the past couple of days. Lint prices in Sindh are said to have ranged from Rs 4500 to Rs 5400 per maund (37.32 Kgs), according to the quality. In the Punjab, the prices were also said to have ranged from Rs 4500 to Rs 5400 per maund (37.32 Kgs) in a mostly listless market. Thus lint prices reportedly decreased by Rs 100 to Rs 150 per maund over the past couple of days. Till late in the evening, 200 bales of cotton from Mianwali in Punjab sold at Rs 5400 per maund. Yarn prices continued to rule lower with fewer enquiries. Thus downside was very pronounced on the cotton market.
According to the Pakistan Cotton Ginners Association (PCGA) seed cotton report showing arrivals for the current season (August 2015 / July 2016) up to 1st of March, 2016, 9,727,771 lint equivalent bales were received by the ginning factories from which the mills lifted 8,546,680 bales. Exporters picked up 361,241 bales, while a quantity of 819,870 unsold bales remained with the ginners both in pressed and loose form.
The total cotton crop in Pakistan during the current season (2015/2016) is expected to be 9.8 million bales of 155 Kgs each. Not much early sowing of the new crop (August 2016/July 2017) has been yet reported. Only very small quantities of new crop cotton are reported to be sown in a few parts of southern Sindh
On the global economic and financial front, recent surveys of purchase managers around the world disclosed that factory activity slowed down globally in February, 2016. According to recent Reuters reports datelined New York / London / Sydney, the "World manufacturing sector growth stagnated in February as falling prices failed to stimulate new orders". This situation compelled factories to cut their workforces thus failing to stimulate the sundry economies around the world.
Thus it was also reported that the British manufacturing activity fell to a three year low level signifying that it's recovery from the financial crisis is decreasing further. Indeed the consumers in the United Kingdom were not confident about any positive turnaround in the British economy since more than a year. Therefore the economic outlook in the United Kingdom remained subdued throughout 2015.
The entire Eurozone is no better in providing any imminent hope for an economic recovery. Both the business community and the people at large in the Eurozone remain saddled with deflation which restricts any meaningful economic growth in the foreseeable future. Even the large communities in the Eurozone like Germany, Spain and France are reported to be under the grip to woefully low inflation. Indeed business confidence in the Eurozone is said to have deteriorated in February 2016 more than envisaged earlier.
In France, the economy continues to slip and unemployment levels remain worryingly high. While France is said to have taken steps to reform its economy, they remain inadequate and insufficient and are thus unlikely to boost economic growth in France for the foreseeable future. Thus low rates of inflation are keeping economic growth in France at a slow pace.
A very notable drag on the functioning of the European Union is the threat of the British electorate in coming June 2016 to withdraw Great Britain from the Union. This threat has to be taken seriously. It is already having very negative effects on the Continental economy.
Another scheme mooted last week was the proposal of BRICS nations viz. Brazil, Russia, India, China and South Africa to float a new Dollars 100 billion bank for major emerging nations with its headquarters in China. Such a bank will function as an "alternative in the existing US - dominated World Bank and International Monetary Fund" which will address needs for infrastructure and sustainable development.
The refugee problem in North Africa leading to the Middle East and much of Europe also remains a socioeconomic and political bombshell disturbing the global economy vastly. Brazil's economy shrank 3.8 percent. On Thursday evening, US shares edged lower while the FTSE was also down. The price of crude oil remains mired in uncertainty. Thus we do not appear to be getting anywhere closer to a global economic recovery any time soon.