Cotton prices continue to remain weak since the past eight or nine days due to slow movement of yarn and fabrics from the textile mills who are facing very difficult conditions. Mainly, the textile mill owners have blamed the government for the supply of power and other inputs at exorbitant rates which have rendered the domestic textile industry incompetitive compared to the regional competitors including India and Bangladesh. Moreover, the textile millers are also complaining against non-refund of their very large amounts of money due to the domestic textile industry.
The domestic textile industry has met government functionaries, concerned ministers including Prime Minister Nawaz Sharif, but no relief or redressal is forthcoming resulting in large closures of spinning and weaving capacities. As a last resort, a large number of spinners also protested on the streets but to no avail. Thus the Pakistan textile is languishing in distress since the past several years. Weavers are also proposing to go on strike from 25 June to 8 July, 2017 to press for their demands. Yarn and fabrics are now said to be piling in the mills. Traders said in Karachi that anywhere from 50,000 to 75,000 bales (155 Kgs) from the current crop (2016/2017) is lying unsold with the ginners. Small quantities from the next crop (2017/2018) have made their debut in the ready market.
It is estimated that Pakistan is likely to produce anywhere from twelve to 12.5 million bales (155 Kgs) during the forthcoming season (August 2017/July 2018) subject to conducive weather. Regular rains are being received in the Punjab presently which till now are deemed beneficial to the standing cotton crop (2017/20018).
New crop (2017/2018) is presently being offered at a reported price range of Rs 6400 to Rs 6500 per maund (37.32 Kgs) on an ex-gin basis. In ready sales of 2017/2018 crop, 200 bales of cotton from Mirpurkhas in Sindh reportedly sold at Rs 6450 per maund (37.32 Kgs), while 200 bales each from Hyderabad and Shahdadpur also sold at Rs 6500 per maund.
Global cotton prices are also reported to be weak. Purchase activity is also slow. Besides incurring losses, mills will also close down as government has announced public holidays on the 26th, 27th and the 28th of June, 2017 due to the incoming Eid -ul-Fitr festival.
We thus see dull activity in the sundry markets till almost the end of this month. Therefore, business will slow down henceforth which will most likely pick up from the beginning of next month.
On the global economic and financial front, while the equity values have generally performed quite well since the beginning of 2017 and in several instances surpassed the higher levels obtaining before the 2007/2008 Great Recession levels, the commodities complex has lagged behind and is still comparatively lagging behind. In this regard, the global crude oil prices which had hit one hundred dollars a barrel are today languishing between Forty to Fifty American dollars per barrel.
It is not only crude oil, but the prices of such commodities like Cotton, Cocoa, Corn, Sugar and Wheat have also declined when compared to the equity markets. f course with sizeable drop in petrol prices, gas prices have also fallen largely. Thus a glut of oil is reported to be floating around the world. Oil producing countries are thus facing hard times.
In this regard, the elevation of Mohammed bin Salman as the new crown prince of Saudi Arabia on Wednesday is not without significance. It is believed that the experience and know-how of the incumbent Saudi crown prince Mohammed bin Salman can contribute by putting a new life to the oil producing and exporting countries (Opec) to bolster the oil industry not only in Saudi Arabia but also in other countries around the world. His role in uplifting the global oil industry is being understood positively. Thus the appointment of the new heir apparent of Saudi Arabia is a key development for the global oil industry. Thus crown prince bin Salman could put new life into the global energy industry, besides, of course, imparting a positive push to the Saudi Kingdom's energy sector.
Besides the woes of the energy sector, the world at large is plagued with security issues with continuous bombings, stabbings and ramming of vehicles into innocent people. With London, Paris, Brussels, Tehran, Kabul, Manchester, Baghdad, Istanbul, Peshawar and other cities having been attacked, it has made normal living and conducting business nearly impossible. Thus a global consensus is immediately required to find ways and means to stop this carnage and allowing people to work and live peacefully.
Several other issues around the world are posing difficulties which are hindering the normal course of doing business. The Brexit problem continues to pose a hindrance not only to the smooth running of the economy of the United Kingdom, but has also put the future of the European Union on a back burner. The widespread conflagrations around the Middle East, unsettled conditions in Afghanistan and the immigration problems on the Mediterranean Sea and in parts of Asia, they remain crucial issues which are hindering the growth of the global economy.