Due to approaching end of the current year (2015), activity on the ready market was relatively low because of the closing of the year for many traders who have to prepare their accounts and adjust their loans with the banks. Fresh trading of cotton would start properly with the advent of the New Year (2016) and thereafter.
Shortages of cotton production from 19 or 20 to about 25 percent for the current season (August 2015 / July 2016) have been reported from leading producers like America, China, India and Pakistan this year estimated to be around a total of 20 million bales, but prices for lint have mostly remained low or rangebound due to a recessionary condition on the commodity markets.
Likewise, yarns and other textile products have also mostly encountered sluggish sales over the past several months. In Pakistan, the current sales position of yarn remains very poor. According to a recent projection, cotton production during the current season (2015 / 2016) in Pakistan is likely to be around 10 million bales (155 kgs). Mills consumption is being estimated to range from 14 to 14.5 million bales. Imports of cotton could range from 3 to 3.5 million bales, while exports could range from 300,000 to 350,000 bales.
Seed cotton (kapas / phutti) prices reportedly ranged from Rs 2,200 to Rs 3,000 per 40 kgs in Sindh on Tuesday, while in the Punjab they are said to have ranged from Rs 2,200 to Rs 3,100 per 40 kgs according to the quality. Lint prices in Sindh were reported to have ranged from Rs 4,700 to Rs 5,600 per maund (37.32 kgs), according to the quality, while in the Punjab they were also said to have ranged from Rs 4,700 to Rs 5,600 per maund in an insipid market. Sale volume was low in a slow but steady market.
With a plethora of taxes, red tape and slow refunds of amounts due to the textile mills by the government, together with sizeable short supplies of utilities like gas and power, even that at rates which are higher than those of regional competitors, Pakistan textile industry has being going through tough times over the past several years.
However, Prime Minister Nawaz Sharif has announced a cut of Rs 3 in per unit tariff of electricity for industrial users with the hope that the exporters would avail of this benefit and increase their sales abroad. The beleaguered textile industry of Pakistan has welcomed this positive step taken by the government.
The chairman of the All Pakistan Textile Mills Association (APTMA) Tariq Saud said that the reduction in power tariff will go a long way towards the revival of the presently fledging textile industry. In another report from Multan, president of the Multan Chamber of Commerce and Industry (MCCI), Fareed Mughis A. Sheikh said on Monday that the Chamber welcomes the government decision to provide 60 MMCFD LNG to the Punjab based textile industry in winter and averted the threat of a complete closure of mills due to the high cost of doing business.
On Tuesday, 1200 bales of cotton from Shadur Lund in Punjab reportedly sold at Rs 4,900 per maund (37.32 kgs), 400 bales from Mian Channu sold at Rs 5,200 per maund, 400 bales from Yazman Mandi sold at Rs 5,300 per maund, 400 bales from Mianwali sold at Rs 5,500 per maund while 400 bales from Nurpur Nauranga sold at Rs 5,600 per maund.
On the global economic and financial front, the outgoing calendar year (2015) has hardly provided any solace in any corner of the earth so that we might soon see any social or political stability and avoid sinking into a slough of despond in these chaotic times which have brought us to the disorderly and untenable situation. The following year, viz 2016 promises to drive us into further disarray and unending disturbances.
In the United States, despite what appear to be signs for a redeeming and restored economy, numerous pitfalls seem to lie ahead which may dissuade us from being optimistic about an early rehabilitation or restitution. Indeed many forecasters believe that the path to economic recovery is not yet around the corner.
For instance, the housing market in America is inflated and thus unsustainably speculative. Student loans are at scary heights reportedly touching an unmanageable one trillion dollars. The Federal Reserve does not appear to have a consistent policy concerning interest rates and waver interminably.
In recent times, the United States stockpile of crude oil still seems to be growing despite the disastrous fall of oil price by nearly seventy percent since the record high prices of crude were established during 2014. Indeed global equity prices are said to have fallen sharply when it was announced by the Saudi government that it would slash public spending and taxes in general would be increased.
Oil prices fell on last Monday after a clutch of disappointing data from Japan which reinforced the belief that the global oil glut will not reduce any time soon. Indeed it has been reported that the Japanese industrial production decreased last month (November 2015) which in turn also pushed Chinese stocks lower. Furthermore, such a development gave rise to fears that consumption of crude would fall sizably in Asia.
According to the opinion of some economic observers, the Chinese economy is heading towards a hard landing. They apprise that a fall in the Chinese economy would be the result of years of overinvestment in unproductive manufacturing plants and heavy speculation in real estate sectors.
Though low oil prices are said to be powering the Asian economies, but how long? Reports further add that any thought of any early economic recovery in India is premature as long as the corporate sector remains weak and the investment situation remains poor.
Reports from Russia added this week that on Monday (28 December 2015) the ruble received a battering and fell to a record low level due to a massive slump in global oil prices further hitting the recession plagued Russian economy.
On last Monday many equity prices plumped around the world such as in Europe, Japan, Hong Kong, United States, China, South Africa and elsewhere. As a result of the aforesaid dour economic news so widely being reported from around the world, one may not surmise that the downtrodden global economic condition is hardly ready for an early rehabilitation.
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