Prices rose rapidly on the domestic market this week recording an increase of Rs 200 to Rs 300 per maund (37.32 Kgs). High advices from New York cotton futures and also from China and India have pushed cotton prices upwards.
Seed cotton (Kapas / Phutti) for the current crop (2015- 2016) Sindh has been totally sold out and the meager amount left in Punjab is being quoted from Rs 3000 to Rs 3200 per 40 Kgs, according to the quality. Lint prices in Sindh are said to have ranged from Rs 4800 to Rs 5600 per maund (37.32 Kgs), according to the quality, while in the Punjab they reportedly ranged from Rs 5000 to Rs 5700 per maund on Thursday in a very tight market.
According to the Pakistan Cotton Ginners Association (PCGA), seed cotton arrivals from the current crop (August 2015 / July 2016) till the 15th of April 2016 were 9,768,443 lint equivalent bales from which the domestic mills have lifted 9,056,526 bales. Exporters are reported to have picked up 362,141 bales while 349,776 bales were lying unsold with the ginners.
Sowing of new cotton crop (August 2016 / July 2017) in Sindh could increase due to prevailing hot weather while sowing in Punjab has also started now. Yarn and textile prices are also reported to be recovering and could increase further due to appreciable rise in cotton prices internationally and also due to the increase in crude oil prices which hydrocarbons are the raw materials for producing synthetic fibers like polyester.
In ready sales on Thursday, 2000 bales of cotton from Tando Adam and 3000 bales from Shahdadpur in Sindh both sold at Rs 4900 per maund being of relatively lower grades. In the Punjab, 400 bales from Hasilpur reportedly sold at Rs 5500 per maund. The Karachi Cotton Association (KCA) also increased the ex-gin prices of grade three cotton to Rs 5500 per maund.
According to cotton traders in Karachi, Pakistan may harvest 12.5 million bales (155 Kgs) of cotton during the forthcoming season (August 2016 / July 2017) subject to clement weather. Due to losses suffered during the current season because of low cotton production and decrease in cotton prices, the growers and the ginners have suffered considerable loss which has also resulted in the loss of their capital.
On the global economic and financial front, the leading news this week pertains to the major decline in Chinese stocks prices since the level of two months ago. Last Wednesday the Chinese shares took a major tumble not seen over the past seven weeks. There was fear that the government may not continue to provide stimulus due to a relative improvement in economic data. Be that as it may, Chinese economy has been mostly wallowing in uncertainty and is also undergoing a large quantum of volatility in recent years.
Since the past several years, several economists and analysts believe that a healthier Chinese economy is a sine qua non for the global economic recovery. It has also been reported that China is facing a growing financial crisis which it may find difficult to control.
In America there are fears that a few big banks are vulnerable and could even fail. Reports indicate that the J.P Morgan Chase is not performing upto the banking standards as desired by the United States Federal Reserve. It is deemed that such a situation at J.P. Morgan could threaten the American economy and also the financial stability of the United Sates. Therefore, the U.S. Federal Reserve Chair Janet Yellen is rightly concerned regarding the possibility of a failure of a large bank not unlike the meltdown of Lehman Brothers in 2008.
Japanese exports were reported to have fallen by seven percent in March, 2016 due to a stronger yen. Imports were said to have decreased by fifteen percent. Importers and exporters were thus facing decline in trade. Japan, however, recorded a trade surplus due to decrease in oil prices over the previous months.
In another economic downside, the unemployment rate was reported to have reached double digits in Brazil. The unemployment figure has risen to 10.2 percent. Economic downturn and alleged corruption of a high order are threatening the collapse of Brazilian President Dilma Rouseff.
Another notable news concerns the decreasing oil revenues and reserves of Saudi Arabia following the decline in crude oil prices in recent months. Thus it has been reported that Saudi Arabia is borrowing ten billion dollars from a consortium of international banks for the first time after 25 years. Other oil producing countries in the Middle East may also be sourcing loans to fortify their weakening cash position.
Thus it is seen that many if not most countries around the world are still entrapped in the widespread economic slowdown which refuses to go away.