With barely a couple of hundred thousand bales (155 kgs) from the current crop (August 2015 / July 2016) remaining unsold with the ginners, mostly of lower grades, lint prices have risen to seasonal high levels. There are reports in the market that the Trading Corporation of Pakistan (TCP) has sold about 4,000 bales it was holding from the 2014 / 2015 crop at Rs 5,860 per maund (37.32 kgs) ex-warehouse, Karachi. TCP is still said to be holding nearly 80,000 bales of the 2014 / 2015 the quality of which is said to be fairly good.
Sindh seed cotton (kapas / phutti) from the current crop (2015 / 2016) has been sold out but small quantities of remaining seed cotton from Punjab is being offered from Rs 3,000 to Rs 3,400 per 40 kgs, according to the quality. Lint prices from Sindh are said to have ranged from Rs 5,000 to Rs 5,800 per maund (37.32 kgs) on Thursday, according to the quality. Lint prices from Punjab reportedly ranged from Rs 5,200 to Rs 6,000 per maund, according to the quality.
New crop (August 2016 / July 2017) sowing in Sindh is making steady progress whereas in the Punjab sowing has just started in a few areas. Yarn and textile business is picking up with a modicum of improvement in prices, but the business is still being conducted on a modest scale. Some observers say that asking prices for yarns by the mills are somewhat on the high side.
Internationally, cotton prices had risen since a few weeks but now they have slowed down due to profit-taking. The prices of Indian cotton are higher due to a shorter crop during the outgoing season. China is said to have indicated to sell a portion of its large reserves of cotton (from May to August 2016). Some reports say that China's indicated price to sell some of its pile of cotton is on the higher side. In Pakistan, one report indicated that the sowing of the new cotton crop (August 2016 / July 2017) was delayed due to inclement weather. Moreover, cotton growers also suffered sizeable losses during the current season (2015 / 2016) due to lower prices. One report indicated that some growers are now thinking of planting sugarcane instead of cotton due to lower returns.
On the global economic and financial front, the first quarter of 2016 has been mostly disappointing for many if not the most of the economies around the world. The largest economy of the world, the United States, posted a comparatively meagre growth of only half a percent during the first quarter of 2016. According to British Broadcasting Corporation (BBC), the dismal growth performance during the first quarter of 2016 in America registers a sharp fall from the 1.4 rate of growth during the final quarter of 2015. Not only that, the half a percent economic growth rate during the first quarter of 2016 in America is the slowest pace in two years.
Several reasons have been put forward to account for the slowdown in American economic growth since the beginning of the year (2016) including a fall in domestic demand and a strong dollar which impeded exports. Furthermore, consumers were buying less and investors slowed down ordering new stock.
It has been further reported that consumer spending increased only at the rate of 1.9 percent which decreased from 2.4 percent recorded during the previous quarter. Business investment reportedly fell by 5.9 percent which is the highest quarterly decline since the depths of the financial crisis in 2009, reports added. Fears are being expressed that America could face another dismal year during 2016 as forecasts for economic growth are now being expressed in pessimistic terms by several experts and economists. It has also been observed that the "American economy has ground to a near-standstill".
The Eurozone is hardly making any substantive progress towards economic growth. For instance, the Eurozone continues to keep its interest rate in the negative territory with its morbid fear of falling into deflation. Negative interest rates in the Eurozone are likely to continue as growth in the private sector is reported to have declined slightly.
At midweek, Chinese shares fell lower on fears that recoveries of loans would be difficult as widespread lending had created doubts about the authenticity of several loans extended to all and sundry. Chinese industrial companies have shown fair profits in March 2016 compared to a year earlier leading to belief that the country's economic slowdown may be bottoming out.
In the United Kingdom, economic growth has slowed in the first quarter of 2016. It has been observed that a heavy drop in construction and manufacturing are responsible for the slowdown. The much feared "Brexit" or the exit of Great Britain from the European Union is being projected by some observers to lead to the break up of the socioeconomic and political cohesion cobbled together after the Second World War in Europe. Anyhow, all around the world traditional political, economic, commercial and social values continuing since almost the past three quarters of a century are under great threat.