Despite a massive decline in the current cotton crop's (2015-2016) production from the earlier projections of 15 million bales (155 Kgs) to about 10 million bales, lint prices have remained mostly ranged bound. Cotton prices are not moving up despite a record shortfall in the current crop because domestic textile mills are in very bad condition and several spinners, weavers and producers of downstream units are very worried as the prevailing cotton economy in Pakistan is going from bad to worse.
Millowners are blaming the government for not providing regular gas and power supply, withholding refundable payments to the industry and also a bad cotton crop qualitatively. One assessment has put the closed spindles in Pakistan at nearly one million, while more units are on the verge of closing down. On Thursday the price of seed cotton (Kapas/Phutti) in Sindh is said to have fluctuated from Rs 2200 to Rs 2900 per 40 Kgs, while in the Punjab seed cotton rates reportedly extended from Rs 2300 to Rs 3000 per 40 Kgs in a steady and stable market.
Lint prices in Sindh are said to have ranged from Rs 4700 to Rs 5600 per maund (37.32 Kgs), according to the quality, while in the Punjab they reportedly extended from Rs 4800 to Rs 5600 per maund, according to the quality. Volume of business was slow and seemed to be slowing down which is increasingly detrimental to the growers as well as the ginners.
Thus cotton production in Pakistan for the current season (August 2015 /July 2016) may be around 10 million bales (155 Kgs), while the mills may need to consume nearly 13.5 million bales of cotton. Mills are already reported to have booked 1.7 million bales for import till now and may needful import a total of 2.5 million bales during the ongoing season.
Punjab province seems to be facing added difficulty due to reduction in gas supply which is further aggravating the performance of the textile mills located in the province. Moreover, there were also reports that textile exports from Pakistan were declining since the past three months or so. With the onset of foggy weather, picking of cotton has slowed down in the Punjab province. Thus the arrival of seed cotton into the ginning factories has reportedly decreased.
In Sindh, 200 bales from Rohri and 600 bales from Salehput both sold at Rs 5425 per maund. In the Punjab province 500 bales from Bahawalnagar sold at Rs 5100 per maund, 400 bales from Chistian sold at Rs 5250 per maund, 400 bales from Fort Abbas and 1000 bales from Harunabad sold at Rs 5400 per maund, 600 bales from Mianwali sold at Rs 5500 per maund, while 200 bales from Rehmyar Khan sold at Rs 5575 per maund.
On the global economic and financial front, it was generally assumed among the leading economists and financiers at the beginning of 2015 that many if not most economies would undergo an upward performance and the bitter memories of the Great Recession of 2008 would be left behind. That was not to be. In fact, despite the belief of the US Reserve Bank that the American economy has turned the corner and hence the global recovery will rebound, it has not happened.
Despite what the Federal Reserve may believe, it remains a fact that several surveys in America have shown a sharp decline in manufacturing and retail sales have also been reported to be weak in America. At best, the American economic performance has remained patchy while incidents of terrorist attacks have aggravated the fear amongst the populace. The mass shootings in San Bernardino have unnerved the United States immensely.
Earlier, the last month's terrorist attacks in Paris are reported to have wiped off no less than a quarter of French growth and shaken its economy unmistakably. This terrorist attack has perforce compelled the Bank of France to revise its growth forecast for the fourth quarter from 0.4 percent to 0.3 percent.
In the United Kingdom, the Chambers of Commerce and Industry has reportedly cut its growth forecasts citing weaker than expected trade and manufacturing performance from 2.6 to 2.4 percent. Moreover, its projections for both 2016 and 2017 have been reduced to 2.5 percent 2.7 percent. Earlier this week, most equity values fell sharply due to weaker economic data, particularly in China, rise in terrorism globally, and a record rout in the prices of commodity prices which sent Brent crude reeling below US dollars 40 per barrel for the first time in almost seven years. Indeed the prices of commodities are falling apart. For instance, the price of iron ore has fallen to a ten year low level.
The World Bank has warned that the Emerging Markets are at a "crossroads" as they are following a path of slow economic growth. According to the European Central Bank president Mario Draghi, the markets are all "messed up". Thus at midweek the sundry equity and commodity markets all fell sharply on dwindling oil prices. Moreover, further fear of falling oil prices appears justified as reported division on oil price policy between its members may crumble the crude oil and hydro carbon future.
Japan may have escaped a "technical recession", its low growth and deflation tend to lower its economic rehabilitation at any time in the foreseeable future. A meltdown in the Russian economy may not ruffle any feathers amongst the economic assessors due to its relatively small size of economy, but its large decline is certainly a grim phenomenon.
An uneasy calm prevails occasionally in the equity and commodity markets, but in fact the global economy may suddenly implode under the prevailing political, financial and economic mismanagement and social uprising.
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