In the backdrop of easier cotton prices and bearish macroeconomic signals internationally, cotton prices in the domestic market were soft and remained on the subdued side on Thursday. Just like the American, Chinese and Indian cotton prices have slid towards the weak side, Pakistani lint prices have also declined.
In a tight money market in Pakistan with several domestic mills reported to be facing payments problems, activity on the local market has been slow. Indeed imports of cotton and yarns by Pakistani mills, significantly from India, have also been reported. Textile circles reported that the industry has been in trouble since a long time now. Inappropriate tax laws, delay in refund payments and continuing energy shortages like gas and power have been largely hampering the functioning of the Pakistan textile industry.
Traders said in Karachi on Thursday that the prices of lower grades of seed cotton (Kapas/Phutti) have fallen by Rs 200 to Rs 300 per 40 Kgs recently, while the prices of better grade seed cotton have reportedly fallen by Rs 100 to Rs 150 per 40 Kilogrammes.
In Sindh, the price of better quality cotton is said to have decreased by Rs 100 to Rs 150 per maund (37.32 Kgs). Thus lint prices in Sindh are said to have ranged from Rs 4600 to Rs 5550 per maund, according to the quality.
In the Punjab on Thursday, the price of better quality of lint reportedly decreased by Rs 100 per maund (37.32 Kgs). Thus the price of lint in Punjab extended from Rs 4600 to Rs 5600 per maund, according to the quality. Mills in Pakistan thus continue to face a challenging situation as not only have their profits been reduced, several mills have also been forced to curtail their production or even close their units.
In Punjab, 200 bales of cotton from Shahpur sold at Rs 5300 per maund (37.32 Kgs), while 200 bales from Bahawalpur sold at Rs 5375 per maund. According to a report from the Karachi Cotton Association (KCA), the 75th Plenary Meeting of International Cotton Advisory Committee (ICAC) will be held from October 30 to November 04, 2016 at Islamabad, Pakistan.
The ICAC Secretariat, Washington DC, USA has forwarded detailed requirements to the Ministry of Textile Industry, Government of Pakistan for hosting the Plenary Session which also includes the preparation of a comprehensive "THEME" of the Plenary meeting.
The theme of the 74th Plenary Meeting of the ICAC held on December 06-11, 2015 at Mumbai, India was "FROM FARM TO FABRIC : THE MANY FACES OF COTTON".
Members of the KCA have been requested to suggest the "THEME" of the 75th Plenary Meeting of the ICAC to the Karachi Cotton Association (KCA) by 13-02-2016 enabling the KCA to submit one of the suitable "THEME" to the Ministry of Textile Industry, Government of Pakistan for their consideration.
On the global economic and financial front, utter panic and pandemonium ruled all the commodity and stocks markets in line with the pronouncements of the United States Federal Reserve Chair Janet Yellen recently warned of rising risks to the American economy. Yellen is reported to have said that the US economy faced risks from "tightening domestic financial conditions as well as global economic turmoil". Yellen told that US legislators that the Federal Reserve is likely to delay, but not abandon, the projected interest rate increases.
This week found a massive plunge in crude oil prices. The crude oil futures market in America crumbled three percent on Thursday pushing down the oil prices again to below dollars 27 per barrel for the second time over the past few weeks. With Iraq and Iran joining the fray and Saudi Arabia increasing its oil exports, the global financial markets are facing widespread instability.
Federal Reserve Chair Janet Yellen cited the market turmoil around the world which is hampering the growth of the US economy. She continued to say that uncertainties regarding the Chinese economy were pushing down commodity prices sharply around the world. This situation would adversely affect commodity producing and exporting countries which in turn would weaken American exports and thus undermine its economy. Thus the pace of Chinese economic growth concerns the American growth considerably as the two have an important correlation.
Even though the banks around the world from America to China and Japan are persuading the investors that appropriate credits are available for investment, the necessary borrowing by the investors is missing. Instead, easy money is now responsible to put oil and other commodities on a downward path and are thus said to be exacerbating the malaise of the sickening global economies.
A new dimension in current economic speculation has arisen regarding fears in the financial markets "over the solvency - profitability, liquidity and stability of the European banking system". Following the persisting global oil glut, it is feared that the prices of crude oil may not recover in the foreseeable future.
Thus this week the global equity markets slumped sharply. In the United States, crashing crude oil prices has worsened the economy. In Japan, banks led the slump on the Tokyo stock exchange this week. The European stocks are reported to have slid to their lowest level since 2013. The Hang Seng Index is said to have fallen to its worst start to a lunar new year since 1994 as trading resumed in Hong Kong. Indian shares have fallen to their lowest levels since May, 2014.
London's top shares have fallen about three percent, while the European markets are said to have seen even larger falls this week amid anxiety about the health of the global economy. Thus an increased uncertainty has gripped the world at large regarding any early rehabilitation regarding the global economy.
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