Despite somewhat subdued prices on the global cotton markets, domestic lint prices were firm to tight because during the current season in Pakistan (August 2015 / July 2016), the crop has suffered a huge shortfall of about five million bales (155 Kgs). Now Pakistan is likely to reap an output of below 10 million bales against the earlier expectations of cotton production close to 15 million bales.
According to cotton consultant Naseem Usman, a crisis has developed in the domestic cotton market because of an estimated 34 percent shortfall viz. nearly 5.2 million domestic size bales deficit against the original projection of nearly 15 million bales which had been expected earlier. Cotton prices for the domestic crop have thus become tighter while mills, particularly producing towels, are said to be receiving encouraging orders at the Heimtextil textile exhibition being held currently at Frankfurt in Germany.
Nasseem Usman estimates that nearly three million bales will thus have to be imported by the Pakistani millers this season (2015/2016) to meet the deficit. From these 3 million bales of cotton expected to be imported, contracts for nearly 2.5 million bales have already been finalized for import, from which an estimated 2.2 million bales will be imported from India. Besides India, import agreements have also been signed with the USA, Brazil, Africa and Greece.
Due to plunging crude oil prices, cotton may face competition from polyester fibre, a hydrocarbon (polyethylene terephthalate) which has similar qualities like cotton and is also blended with cotton. Thus global cotton prices may be contained because of relatively cheaper supply of polyester fibre.
On Thursday the seed cotton (Kapas / Phutti) prices in Sindh were said to have ranged from Rs 2000 to Rs 3000 per 40 Kgs, while in the Punjab they were said to have extended from Rs 2300 to Rs 3150 per 40 Kgs, according to the quality. The lint prices in Sindh were said to have ranged from Rs 4700 to Rs 5650 per maund (37.32 Kgs), according to the quality while in the Punjab they are said to have extended from Rs 4700 to Rs 5700 per maund. Ginners were said to have been reluctant sellers on Thursday because supply of lint will henceforth be limited because of very short crop in Pakistan during the current season.
According to an announcement by the Karachi Cotton Association (KCA), the International Cotton Association (ICA) is holding a two days workshop at the Movenpick Hotel, Karachi on January 26 - 27, 2016 which has been arranged by the KCA. The subject of the Workshop / Training Session will be "Avoidance and Settlement of Cotton Disputes". One representative of Member firms of the KCA may participate in the Workshop/Training Session free of cost, but Non Members will be charged Registration Fee.
The Workshop topics include an Overview, Disputes 'creators', Avoidance of Disputes, a study and understanding of contractual terms /conditions, a study of ICA Bylaws and Rules, review of "action of parties", Negotiation and Settlement of Disputes. Mr Derek Tanner, Former President, ICA will conduct the workshop.
On the global economic and financial front, it was being surmised at the tailend of the previous calendar year (2015) that the worries of the previous eight years are slowly but steadily receding. Indeed the signals from Chairperson of the United States Federal Reserve, Janet Yellen, were that under the leadership of the American economy, the world economy would turn the corner.
Also, that the Chinese economy would consolidate after a necessary correction and thus assist in the improvement of the global economy. Moreover, it had also been projected during the middle of last year (2015) that the emerging economies would boost the global economy.
However, all these assumptions proved to be incorrect and the global economy has received a serious setback and has taken a downturn accompanied by momentous pitfalls. It is now the eight years (2008 / 2016) since the American economy is limping. Some observers believe that the US economy is sliding downwards in real terms where unemployment is really very high, the wages are stagnant, many more industrial units are closing down and the Federal Reserve step to hike the interest rate cannot hide the fact that America is going through very tough economic times. Many millions of Americans are being forced to lead a frugal life with no immediate change for improvement in sight. Indeed the American economy is said to have become anemic with little hope for immediate recovery.
A continuous series of routs on the Chinese equity markets since the beginning of this year (2016) have not only shaken the Chinese economy largely, they have also rattled the equity markets in a major and devastating way universally. By the middle of this week, the Asian stock indices fell lower that the 2011 levels. At the beginning of this week, Wall Street lost its nerve on concerns relating to plunging crude oil prices and slowdown of global economic growth. On last Monday, the Chinese stocks fell down to their lowest levels since September 2015. Moreover, Chinese exports fell in December, 2015, while coal imports into China during 2015 plunged a staggering thirty percent.
According to Lucas Jackson as reported by Reuters, "the global economy is heading for financial crisis as crushing as the 2008 / 09 collapse, which could be very ugly and foreshadow the end of the Eurozone". He added that deflation from the emerging market economies is likely to hit western trading. He continued to say that the "Developments in the global economy will push the United States into recession".
With crude oil prices falling below Dollars thirty per barrel this week, the lowest level since 2003, Organisation of Petroleum Exporting Countries (Opec) has called emergency meeting to tackle the plunging oil prices. Due to the fall in oil prices, Russia is being forced to review its budget. Bankruptcies in Brazil have reached record levels.
Social unrest following several bomb blasts and the increasing activity of suicide bombers has disrupted economic activity immensely. These blasts and bombs have been increasingly blowing up important city centers in Paris, Colonge, Pathankot, Jammu-Srinagar, Nigeria, Cairo and Kolkata. Thus the socioeconomic condition around the world has been torn into tatters.
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