This week cotton prices moved up gradually as lint supplies for the higher quality of cotton were slowly but surely decreasing. Thus in recent days cotton market has mostly been steady and stable. Moreover, Karachi traders added that some exporters have also been buying cotton at lower rates, whenever possible.
As and how cotton arrivals of quality cotton is decreasing, selling pressure on the ginners is also reducing. In view of increase in lint prices, the Karachi Cotton Association (KCA) also increased its ex-gin rates of grade three cotton on Thursday from Rs 6250 to Rs 6300 per maund (37.32 Kgs). Volume of business for the higher quality cotton also increased. Though yarn prices were mostly unchanged but stray enquiries for yarns were reported from some quarters.
Thus on Thursday the seed cotton (Kapas/Phutti) prices from Sindh were said to have ranged Rs 2600 to Rs 3250 per 40 Kgs, as per quality. In the Punjab, seed cotton prices reportedly ranged from Rs 2800 to Rs 3500 per 40 Kgs. Traders are now estimating the current cotton crop (August 2016 / July 2017) in Pakistan to be in the vicinity of 11.20 million bales (155 Kgs) on an ex-gin basis. In the meantime, mills in Pakistan are said to have received 1.2 million (1,200,000) bales of imported cotton till now during the current season (2016/2017).
In Sindh, the general prices for lint cotton are said to have ranged from Rs 5600 to Rs 6550 per maund (37.32 Kgs), according to the quality. In the Punjab, lint prices on Thursday reportedly ranged from Rs 6300 to Rs 6600 per maund, depending on the quality. The cotton market was reported to have been steady on Thursday.
Textile mills in Punjab are highly aggrieved at the government because they have to pay higher prices for gas compared to the other provinces. Thus the Punjab textile industry claims to be suffering seriously. Moreover, the entire textile industry in Pakistan is facing stiff competition from Vietnam, Bangladesh, India, and Sri Lanka where cost of inputs is sizeably lower than those fixed in Pakistan by the government.
Higher counts of yarn such as 30/1 and above are also being imported from India into Pakistan at cheaper rates which is said to be affecting the spinning industry adversely. In other news, brokers have reported from Karachi that America exported 405,000 bales of cotton this week which is double the amount compared to the export of last week.
In ready cotton sales reported on Thursday, 500 bales of cotton from Sanghar in Sindh sold at Rs 5700 per maund (37.32 Kgs), 1000 bales from Khairpur sold Rs 6200/6250 per maund and 800 bales from Daur sold at Rs 6050 per maund. In the Punjab, 1000 bales from Mianwali sold at Rs 6000/Rs 6050 per maund, while 100 bales from Sahiwal sold at Rs 6350 per maund.
On the global economic and financial front, despite the bloating equity indices in most parts of the world, there are also attendant fears that the indices now prevailing at dizzy heights and record levels could plump precipitously. In this regard, it has been forecast in a client survey by Oxford Economics Ltd that US President - elect Donald Trump's future policy stance poses "the single largest risk to the global economy".
Amongst other declining economic factors, it has been stated that "the probability of a sharp slowdown has increased over the past three months. Some reasons cited for this dire forecast include "potential trade war triggered by Trump with China over the next two years followed by a severe downturn in the Chinese economy." Earlier during his presidential campaign, Trump had charged China for being a "currency manipulator" who also raised barriers to foreign competition. In this connection, noble laureate of Havrard University Oliver Hart has said that President - elect Donald Trump's economic programe is worrying as it "threatens to dismantle trade agreements and trigger a protectionist era that would ultimately be bad for the world.
Besides the economic downside prevailing globally since the past ten years or so, viz the Great Recession which is still continuing, geopolitical tensions are being cited in such areas as the Middle East such as in, Syria, Yemen, Iran, and the South China Sea fracas is also aggravating the global instability seriously.
Other reasons being cited by the analysts and observers for the impending global gloom and doom include the unfinished agenda pertaining to growing fear of a possibility of the revival of "Cold War" between Russia and the West, the growing spectre of populism and nationalism around the world and the increasing fears of splintering of the European Union.
To cite one example of populism and the attempt by various countries to go it alone, Italy's example may suffice to show how the voters last week rejected constitutional changes which would have streamlined the functioning of the government. Moreover, the constitutional changes would also have helped to revive the economy and strengthened the banks to stave off a monetary and economic disaster.
Like some other countries in Europe, and indeed around the world, public debt is ballooning in Italy- indeed it is a real problem. According to one report, Italian banks are carrying dollars 400 billions of nonperforming loans which amounts to nearly a third of the nonperforming loan of the Eurozone. Indeed the Euro is said to be wobbling after the recent referendum in Italy. Prime Minister Mattro Renzi resigned soon after the Referendum. Indeed Italy's bank system is said to be crumbling and has reached the edge of the precipice.
Italy is just an example. The European Central Bank (ECB) has warned of a high level of uncertainty in the entire Eurozone. Similar disconcerting news is pouring in from all around the world. The crisis in Brazil is breeding hopelessness. The destruction of Yemen is alarming. The shattering treatment of the Rohingas in Mayanmar is genocide of unparalleled proportions. Iran is angry over economic sanctions being imposed by the United States. In brief, the entire global political, socioeconomic and financial harmony which was developed and nurtured after the Second World War is being struck down irrepressibly.