The ginners who were selling cotton sparingly over the past few weeks are now said to be keen sellers but the spinners are keeping their purchases mostly in abeyance. Fearing rise in cotton prices and watching the domestic cotton crop output estimates decreasing week by week, mills had started building ample inventories of both local and imported cotton. Now the global lint prices have also calmed down so that the domestic mills have presently lost their appetite to purchase more lint. It is therefore reported that lint prices in the domestic market have gone down by Rs 150 to Rs 200 per maund this week.
The seed cotton (Kapas / Phutti) prices on Thursday also ranged lower by Rs 150 to Rs 200 per 40 kilogrammes. In Sindh, the seed cotton prices are said to have ranged from Rs 2500 to Rs 2900 per 40 Kgs, while in the Punjab they are said to have extended from Rs 2400 to Rs 3000 for 40 Kgs in a tepid market.
Lint prices in Sindh on Thursday are said to have obtained from Rs 4850 to Rs 5500 per maund, according to the quality. In the Punjab, they also reportedly ranged lower from Rs 5200 to Rs 5550 per maund with diminished offtake. The current cotton crop (August 2015 / July 2016) is said to be quite short and may be estimated to produce between 11.5 and 12 million bales (155 Kgs) on an ex-gin basis. According to the Pakistan Cotton Ginners Association (PCGA), seed cotton arrivals of the current crop (2015 / 2016) till the first of November, 2015) were 6,465,600 lint equivalent bales from which the domestic mills have lifted 4,216,665 bales. Exporters have picked up 333,555 bales while 1,915,380 bales are lying unsold with the ginners in both pressed and loose form.
In ready sales of cotton Thursday, 200 bales of cotton from Chistian in Punjab reportedly sold at Rs 5325 per maund (37.32 Kgs), 200 bales from Bahawalnagar sold at Rs 5425 per maund, 600 bales from Layyah sold at Rs 5450 / Rs 5500 per maund, 400 bales each from Ahmadpur East and Bahawapur sold at Rs 5500 per maund, while 400 bales from Rahimyar Khan at Rs 5600 per maund.
In Sindh, 200 bales from Naushehro Feroz sold at Rs 5325 per maund, while 200 bales from Daherki in Upper Sindh sold at Rs 5500 per maund. Mills have also been reporting several quality problems in this year's lint due to inclement weather and several pest problems.
Both the prices of raw cotton and yarns remain under pressure. Yarn sales are said to be continuing but sales volume and prices are said to be under pressure. On the global economic and financial front, the significant news was the statement of Janet Yellen, the chair of the United States Federal Reserve that interest rates are likely to rise come December 2015, albeit thereafter the going would be slow. After a piteous performance pertaining to most economies around the world, the Federal Reserves announcement in interest rise put a pause to outright pessimism which was mostly prevailing on the global economic front. However, the basic economic and financial worries around the world have hardly gone away. In fact, the economies are reported to be clearly slowing down around the world. They are likely to persist during the foreseeable future.
In the United States, the economic growth fell sharply during the third quarter of this year. It was reportedly the biggest quarterly drop since the aftermath of the financial crisis. Therefore, the United States economy is hardly out of the woods and the equity markets in America keep drifting, even if on the aggregate they have moved up during the past several years.
In China, the manufacturing sector has shrunk further, slowing down the factory activity there with decline in the Purchasing Managers Index (PMI) as the factories continue to struggle. The economy in China has stumbled as the manufacturing sector has shrunk for the third straight month. There are lurking fears that China may face a significant slowdown at the end of the year. Moreover, reports add further that various surveys show that the Chinese economy is still wobbly.
China is also facing disinflationary pressures and has also moderated its expansion programme. It has fixed its growth target lower at 6.5 percent being the first instance when the Chinese leaders have suggested a figure of annual economic growth which is lower than seven percent. The Communist Party has said that China needs to maintain "medium-high" economic growth during the 2016 - 2020 period. It has been added that the current floor of 6.5 percent is the minimum pace of growth to double the size of the economy and its per capita income between 2010 and 2020.
Nevertheless, China is opening a trading centre which will be a centre for trading and pricing offshore yuan-denominated assets. The deal signed last week reportedly calls for China's foreign exchange operator to set up a joint venture with Deutsche Boerse. The new company, CEINEX is mernt to raise the currency's profile in Europe's financial markets, according to Reuters.
In the Eurozone, the private business growth was reported to be lukewarm last month. The inflation rate in the Eurozone is said to have returned to zero. Despite the massive stimulus measures provided by the European Central Bank, business firms were said to be slashing prices to prop up trade activity.
The emerging markets are showing their worst performance in ten years. Similarly, the developing world is also said to be entering "a new and dangerous phase". The balance sheets of both the emerging markets and the developing countries are said to be eroding fast. Commodities including oil prices have fallen sharply. Thus it may be presumed that the global economy has a long way to go before it re-enters positive territory.
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