A slow sale activity was witnessed on the cotton market on Thursday with scant buying interest on the part of the spinners. Although only about 550,000 bales (155 Kgs) remain unsold with the ginners from the current crop (August 2015 / July 2016), mills are hardly making any purchases.
The condition of the domestic textile industry continues to remain unwell. The global cotton situation is also reported to be subdued. Moreover, from the remaining unsold quantity of cotton in the domestic market, barely about 150,000 bales may be of better quality. Therefore, the domestic cotton market is passing through a lackluster phase.
Thus on Thursday the price of seed cotton (Kapas/Phutti) in Sindh is said to have ranged from Rs 1800 to Rs 2700 per 40 Kgs, according to the quality. In the Punjab, the seed cotton prices are said to have ranged from Rs 2000 to Rs 2700 per 40 Kgs, as per quality. Very little quantity of seed cotton now remains available in the market.
Traders added that cotton market is mostly on the quiet side with lack of much activity. Prices of cotton from Sindh reportedly ranged from Rs 4500 to Rs 5500 per maund (37.32 Kgs), according to the quality. In the Punjab, lint prices are said to have ranged from Rs 4800 to Rs 5500 per maund, as per quality.
Sales reported till the evening was sparse. In Sindh, 1200 bales of cotton from Mehrabpur were said to have been sold at Rs 5100 per maund (37.32 Kgs), while in the Punjab 600 bales from Harunabad reportedly sold at Rs 5300 per maund in an insipid market. The output of the current cotton crop (August 2015 / July 2016) has been disastrous. Instead of a projected 15 million bales (155 Kgs) envisaged at the beginning of the season, only about 9.8 million bales will be reaped. This is a major disaster for the cotton economy of Pakistan and is almost unprecedented.
To consider and debate the causes of this disaster, specially in Punjab, the Karachi Cotton Association (KCA) has convened a "One Day Conference on Cotton" on Tuesday, March 15, 2016 where both the government and the private sector have been invited to participate and evolve necessary plan of action to obtain a better crop next year. The KCA has invited representatives of the All Pakistan Textile Mills Association (APTMA), Pakistan Cotton Ginners Association (PCGA), Farmers Associates Pakistan (FAP), prominent growers and senior members of cotton trade as well as officials of ministry of Textile Industry. Government of Pakistan has also consented to attend the Conference for the best interest of the cotton economy.
On the global economic and financial front, various signs and signals clearly indicate that the world economy continues to slide downwards. Indeed the International Monetary Fund (IMF) has pleaded strongly for concerted efforts and actions to forestall a global economic slide. IMF pointed out that procrastination on the part of global economic leaders is dangerous when they deem that they have exhausted all the means to boost the global economy. Such inertia and lack of will on the part of global economic leaders, particularly from the advanced economies, increases the downside risks to the global economy.
Indeed the IMF has stated in no uncertain terms "amid a pull out of capital from emerging economies and a sharp contraction in global trade" remains a palpable threat to the global economy. Indeed the IMF Deputy Managing Director David Lipton is reported to have said earlier this week that "Moreover, risks have increased further, with volatile financial markets and low commodity prices creating fresh concerns about the health of the global economy".
On its part, the World Bank said earlier this week that "the slump in Chinese growth and its nascent economic transition was the key factor in a sharp slowdown last year in global trade". China is said to be shifting its export driven economy to one rooted more in domestic consumption. The World Bank added that the slump in commodity prices is due to large oversupply around the world.
Furthermore, Chinese exports in February, 2016 are reported to have posted their worst fall since May 2009. Likewise, a sharp decrease in Chinese import is deemed to be a global worry. Reports from Frankfurt indicated that industrial orders in Germany declined in January, 2016 as a result of falling demand at home and in non-Eurozone countries. Reuters reported from Tokyo that "Japan faces downside risks to growth this year", which is a cause of concern. Japan already has a low potential for growth.
In the United States, the wholesale inventories are reported to have risen unexpectedly in January, 2016 as sales faltered. Such a situation could well linger on the rest of the current year (2016) which would be a definite hurdle and could also hurt industrial activity. With these economic and industrial activities slowing down growth and progress around the world, it appears premature to expect any positive turnaround any time soon.
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