As less than 100,000 bales of current crop (August 2014 / July 2015) remains unsold in the market, prices remain mostly steady till the arrival of new crop (August 2015 / July 2016). Seedcotton (kapas / phutti) from the new crop may arrive in very small quantities by the middle of June 2015 into the ginning factories which may press the same for delivery of a few hundreds bales by the last week of June 2015.
There has reportedly been good sowing of the new crop cotton in Pakistan. Recent rains in both Sindh and Punjab are reported to have been beneficial. During July 2015, about 10,000 bales of new crop (2015 / 2016) may be pressed while in August 2015 many more ginning factories will go into ginning the new crop. Month of Ramazan starting by the middle of this month and then later in July 2015 when Eid-ul-Fitr will be celebrated, some slowdown in delivery of cotton trade and ginning may occur.
In the ready cotton market, the prices of cotton from the current crop (2014 / 2015) are stable and steady due to dearth of cotton. However, the demand for cotton is not very high because many of the textile mills are not faring well. Yarn prices in the domestic market are also not doing well. Mills are mostly facing losses. The demand for global cotton is said to be stable.
The general price idea of cotton form Sindh from the current crop was said to have ranged from Rs 4,200 to Rs 5,500 per maund (37.32 kgs), while in the Punjab the lint prices reportedly ranged from Rs 4,800 to Rs 5,600 per maund, according to the quality. According to press reports, a meeting of the National Assembly Standing Committee was held last Tuesday under the chair of Khawaja Ghulam Rasool. After long discussion, the Committee and the Minister of Food and Security and Research Sikandar Hayat Bosan agreed to fix the price of new crop seedcotton (2015 / 2016) at Rs 3,200 per 40 kgs which will be the intervention price for the benefit of the growers.
According to a press release of Karachi Cotton Association (KCA), Amin Hashwani, chairman of KCA, has expressed great concern over the intention of the government to impose sales tax on raw cotton in the Federal Budget 2015-16 in order to generate its revenue. Amin Hashwani added that the KCA has always opposed imposition of sales tax on raw cotton as it hinders production and inhibits smooth flow of exports which results in growers getting a low price for their cotton.
Hashwani added that nearly 80 to 85 percent of the cotton crop is exported either in the form of raw cotton or cotton manufactured products including fabrics and garments, so that the tax would have to be mostly refunded and it takes 6 to 7 months to get the refund which blocks up liquidity and the government receives a comparatively insignificant amount of tax whereas lot of money is spent to administer and collect the sales tax. Therefore, the KCA has strongly urged upon the government not to impose sales tax on raw cotton which imposition will be counter productive.
On the global economic and financial front, the growth of the world economy has received a setback as now it is viewed that the world economy will grow only at 3.1 percent in 2015 against an earlier forecast of 3.6 percent as assessed by the Organisation for Economic Co-operation and Development (OECD). Similarly, global economic growth for 2016 is now projected at 3.8 percent against the earlier projection of 3.9 percent announced by the OECD six months ago. OECD announced that this slowdown was due to an unexpectedly weak first quarter when the world growth fell to its lowest level since the financial crisis of 2007-08 when the housing bubble burst in mid - 2007 in the United States.
The OECD has also slashed its United States growth forecast diminishing any chances that America would start to show higher economic growth in the near future in any appreciable way. In fact it has been reported generally that besides the American economy, most of the economies around the world are slowing down. A strong U.S. dollar has hit American exports.
There are other negative fallouts in the American economy which do not always appear in the statistics or make the headlines. For instance, there is the fear that any further drop in economic growth would put upto half of Americans without any recourse to emergency funds unless they continue to sell more of their personal assets. Alternatively, they would approach informal lenders such as pawn shops or nonbanking credit sources. According to a write-up carried by the Huffingaton Post, "Half of All American Families is staring at Financial Catastrophe". In this connection, a Reuters report from London said that "Manufacturing activity showed few signs of picking up across Europe, Asia and America in May (2015) as demand stayed stubbornly weak, highlighting the need for central banks to continue supporting economic growth. The U.S. consumer spending is also said to be flat. Anyhow, the U.S. Federal Reserve has said that the "overall economic activity expanded" from early April to late May,
In fact, the Cable News Network (CNN) has just now reported that "two of the largest engines of the world economy - United States and China - have slowed down". In China it has been reported that it could not sustain its incredible growth which adversely effected the global economic growth. Two problematic economic sectors in China, namely manufacturing and exports, have gone down considerably.
Many economists had bet that the global economy would grow during 2015, but presently several countries around the world remain remarkably shaky, even wobbly. The muddle in the Greek economy which has reached the end of its tether regarding its financial credibility continues to haunt the overall financial structure of the Eurozone. It presently seems that even if Greece manages to gather enough money to pay its incoming dues in the near future, its credibility to continue paying its creditors has become extremely doubtful.
At midweek several stocks indices fell around the world as in China, India, Japan, Europe and Australia. Then it was reported that stocks in Europe fell on Wednesday for a third day due to the impasse in talks between Greece and its lenders and there appeared a deepening fear of more losses to come. Therefore, at present there appeared no signs that the world economy, including America and the Eurozone, while see any meaningful recovery in the foreseeable future.
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