Cotton prices remain stable

Cotton prices continued to remain steady and stable and indeed recorded some increase at the beginning of this week due to sizeable decrease in output compared to earlier projection. Despite very poor performance of the domestic textile industry, cotton prices remain stable due to net shortage of lint supply, even though the mills have reportedly imported considerable quantities of cotton.
Cotton circles say that the current cotton season (2015/2016) in Pakistan started with the anticipation that a healthy output of around 15 million bales (155 Kgs) of cotton would be reaped, which estimate has now decreased to range from 11 to 11.5 million domestic size bales. Due to rains and floods at the inception of the current season, sowing was delayed in Punjab, the larger cotton producing province in Pakistan.
Furthermore, due to inclement weather, pests like whitefly and pink bollworm are said to have attacked the standing crop. A rough estimate is that the output is likely to go down by three to 3.5 million bales. Out of the total crop, about forty percent may be estimated to be of good quality, while nearly thirty percent may be below average. Mills may import between two and 2.5 million bales of cotton during the current season. It is now estimated that Pakistan mills may have bought up to 1.3 to 1.4 million bales up to now. Industry circles indicated that a considerable quantity of type Bola/s 1-1/16 has been sold into Pakistan comprising both current and new crop. Furthermore, a large quantity of Indian and some Brazilian styles have also been sold.
Seed cotton (Kapas/Phutti) prices from Sindh are generally said to have been sold at Rs 2200 to Rs 2800 per 40 Kgs, according to the quality. In Punjab, seed cotton reportedly sold from Rs 2300 to Rs 3050 per 40 Kgs on Thursday. Lint from Sindh is said to have sold from Rs 4800 to Rs 5600 per maund (37.32 Kgs), according to the quality. In the Punjab, ginned cotton reportedly sold from Rs 5000 to Rs 5600 per maund on Thursday. They were also reports that the quality of cotton is decreasing increasingly.
Yarn sales are not doing well amid reports that a number of mills are closing down, including the open end mills. Thus the Pakistani textile mills are continuously facing several difficulties, including high costs of production and low supply of utilities, while high rate of taxes and delay of refunds receivable from government departments are also hurting the industry.
At the recent elections of the brokers of the Karachi Cotton Association (KCA), the Naseem Usman Panel has been elected as the member of the Brokers Advisory Committee of KCA. Mohammad Naseem Usman has been elected as the Chairman, Girdhari Lal Assudomal as Vice Chairman, Abdul Jaleel Khan as secretary, Faraz Muhammad Yousuf as joint secretary, Muhammad Taufiq Haroon as treasurer and Taqi Abbas as incharge of public relations.
On the global economic and financial front, some news are trickling in pointing to better conditions in the United States which is likely to guide the Federal Reserve Bank to start raising interest rates before the end of this year. Furthermore, in case the American economy continues to stabilise during the incoming calendar year, viz. 2016, more such increases of around quarter of one percent may take place every three or four months thereafter.
The trouble is that the United States, the economies of Europe, the emerging markets and also the developing countries are mostly performing poorly. Indeed the likes of China, Australia, Brazil, Turkey, Russia, and similar economies in other regions are not only performing poorly but remain vulnerable to aftershocks pertaining to the increasingly dangerous geopolitical situation.
For instance soon after the shooting down of a Russian war plane by Turkey recently, the event sent equity markets plunging down. Furthermore, the continuing fall in commodity markets is debilitating the exports of raw materials from many countries depending largely in the exports of primary raw materials. Thus mining shares tumbled again when the price of iron ore, the prime ingredient for the manufacture of steel touched a new ten year low level. Since iron ore is Australia's leading export item, it hurt the Australian economy largely.
Terrorism has now become a key factor which has put a spanner in the normal working of the global economy. Indeed growing terrorism, particularly the bombing in Paris and its connection to Brussels has alarmed the global business community while already global economy is functioning in a stagnating manner. Furthermore, fall in factory output in the United Kingdom has been recorded due to the strength of the pound which has also reverberated around the world.
Moreover the European economy reportedly lost steam as German growth performance slowed down in the third quarter. The crash in the price of crude oil continues to keep the Eurozone is near stagnation which reportedly has resulted in the continuation of its economic weakness.
Travel and hospitality industries are experiencing a new downswing following a fall in customer demand due to the recent armed attacks in France and Mali. Brussels, which still remains on terror alert, has also reduced the functioning of the transport industry.
In brief, the rising and widening of tensions around globe, the increased influx of refugees in Europe and Asia, and other continuing geopolitical tensions have reduced any possibility of an early global economic recovery.