Cotton market essentially remained in a stable and steady condition due to a reported decline in the arrivals of seedcotton (Kapas /Phutti) into the ginning factories over the last week or ten days. Traders say that seedcotton arrivals will now pick up early next week to resume their normal pace. Thus both in Sindh and Punjab the ginning operation will gain speed.
Seedcotton prices in Sindh generally were said to have ranged from Rs 2300 to Rs 2350 per 40 Kgs, as per quality, while in the Punjab they reportedly ranged from Rs 2100 to Rs 2325 per 40 Kgs on Thursday. Lint prices were said to have ranged from Rs 4600 to Rs 4625 per maund (37.32 Kgs) in Sindh, while in the Punjab they reportedly ranged from Rs 4600 to Rs 4650 per maund, according to the quality. In ready cotton business reported on Thursday, 400 bales from Moro in Sindh reportedly sold at Rs 4600 per maund (37.32 Kgs), while 400 bales from Nawabshah, 800 bales from Shahdadpur, 1000 bales each from Sanghar and Tando Adam all reportedy sold at Rs 4600 / Rs 4625 per maund in a well held market.
In the Punjab, 600 bales of cotton from Burewala were said to have been sold at Rs 4600 per maund (37.32 Kgs), 600 bales from Khanewal sold at Rs 4600 / Rs 4650 per maund, while 1000 bales from Mian Chunnu sold at Rs 4625 / Rs 4650 per maund. According to the recent report of the Pakistan Cotton Ginners Association (PCGA), seedcotton for 1,339,990 lint equivalent bales (155 Kgs) arrived into the ginning factories till the 1st of September, 2015. From this figure, the domestic mills were said to have lifted 1,029,690 bales, while the exporters picked up 92,420 bales. Total unsold stock lying with the ginners was said to be 217,880 bales. Besides the mills, exporters were also active in purchasing cotton in the domestic market.
Yarn prices were not performing well in the domestic market and global markets were also reportedly weak. Domestic textile activity therefore remains dull and negative except for some of the larger groups who are performing well. According to the traders, this years Pakistan cotton crop (August 2015) will range from 14 to 14.5 million domestic size bales (155 Kgs). Domestic mills will reportedly use 14.75 to 15.25 million bales while imports of cotton are projected at about one million bales where as the exporters could ship nearly 750,000 bales.
The international cotton prices are not doing well as no demand appears to be in hand. Recently, cotton prices are reported to have remained under pressure. The demand of cotton from the spinning sector remains on the weak side. Even the speculators are said to have been biding for time in the futures market in recent days.
On the global economic and financial front, one would hardly consider the current calendar year (2015) as being propitious. Indeed we have recorded the current year as having undergone the biggest contraction since 2008. Indeed the International Monetary Fund (IMF) has warned that the current state of the global economy hardly warrants any optimism because of the increased global downside risks, in particular for the emerging and the developing countries. Indeed the IMF updated its impressions of the global economy to say on Thursday that "slower economic growth in China and continuing stock market uncertainty pose a threat to global economic growth".
Enumerating the factors responsible for the downward slide in the world economy, the IMF has listed China's growth transition, lower commodity prices, problems of adverse corporate balance sheets and funding challenges to the corporate sector. Those observations are contained in a report presented to G20 finance ministers and central bank governors for the meetings starting in Ankara on Friday. Thus any positive factor in the global economy appears to be destined at a later date, probably after some more years down the road.
With the exception of possibly the United States which pared some losses on the equity market on last Monday, most if not all the stocks markets fell decidedly at the beginning of this week signalling a continuously sickening economic scenario for much of the world at large.
Thus the various reports from different parts of the world were essentially negative. Indeed the United States equities again gave in to decreasing values. The headlines in the sundry media are amply indicative of the declining equity markets later during the current week. For instance, Reuters reported from New York that Wall Street turbulence has returned as weak China data has magnified fear in the investors.
In the Eurozone, the shares slid to their worst monthly performance since August, 2011 due to lingering fears about the health of the Chinese economy and the fear that the American Federal Reserve Bank may increase interest rates. Earlier during the week, it was reported from Shanghai that stocks in China fell as crackdown by the officials on speculators was widened.
There were also reports that the European Central Bank may widen its stimulus scheme because the current economic growth and inflation targets have to be reduced due to poor economic conditions. Moreover, fresh fears have arisen that China's larger negative repercussions have extended to several other countries than envisaged earlier. Moreover, the commodity and raw materials prices are continuing to fall precipitously.
Thus this week we saw the Japanese stocks tumble. Hong Kong equities went flat, Indian shares ended lower, Australian shares slid lower on last Monday recording its worst monthly performance in seven years, the Indian stocks are reported to have recorded their lowest close in over a year. Moreover, other bad news includes the reports that Canada has officially entered into a recession. Brazil remains in hot water due to its collapsing socio-economic order. Thus the more and more hopes of an early global recovery are fading fast with little hope for a restitution of the world economy in the foreseeable future.
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