Despite the fact that hardly 400,000 to 500,000 bales (155 Kgs) from the current crop (August 2015 / July 2016) remain unsold with the ginners, business remained on the very low to quiet side. Even the weak New York cotton futures prices did not support any rise in business. Thus the turnover in the ready cotton market remained meager on Thursday. In fact, market sentiment was said to have deteriorated at the coming weekend.
Textile markets were also reported not to be doing well. The exports of fabrics were also said to have gone down. Market just ambled along with hardly any buying interest. Mills were unsuccessful in selling yarn to China at a recent exposition. Recent sales of local cottons have been just nominal.
Initial sowing of new crop cotton (August 2016 / July 2017) has started in few areas in Sindh such as Umerkot and Badin. In the Punjab, sowing of the new crop has started slowly in very few areas. There is not any incentive to plant cotton expeditiously as international prices are also reported to be subdued. Moreover, due to current Hindu Holi Festival, business is reported to be slow.
In the mean time, the Pakistan Textile Exporters Association (PTEA) has pleaded to the government to immediately release the working capital stuck up with government, bring down the cost of production and provide competitive edge in the region and also to announce the textile package to make the textile exporters competitive in the region. Pakistan textile manufacturing and textile export industries are suffering since the past few years due to lack of several facilities which the neighbouring countries are enjoying.
Seed cotton prices in Sindh reportedly ranged from Rs 2000 to Rs 2200 per 40 Kgs on Thursday, while in the Punjab they are said to have ranged from Rs 2400 to Rs 2900 per 40 Kgs in an insipid market.
Lint prices on Thursday are said to have ranged from Rs 4200 to Rs 5400 per maund (37.32 Kgs) in Sindh, while in the Punjab they are reported to have ranged from Rs 4500 to Rs 5500 per maund, as per quality. Domestic textile industry is passing through tough times since the past few years, especially in the Punjab. According to the traders, gas supply has been increased in the Punjab which should be very helpful to the industry.
On the global economic and financial front, both commodities as well as equity markets have fallen this week. A recurring global oil glut, deadly attacks by suicide bombers last Tuesday in Brussels and strengthening of the dollar have all contributed to a notable drop in most equity markets around the world.
These days the global crude oil market has reportedly fallen deeply now prevailing at its lowest levels since the 1990's. It is said that profits for oil companies have vanished and large losses are being incurred leaving many entities to cut down production will no new investment in sight. The deep fall in crude oil prices continues to be the worst since nearly two decades with no new capital entering the industry. Analysts say that crude prices have fallen more than seventy percent since the middle of 2014. An oil glut being worst in its history has pervaded the oil industry.
We also know of Brussels as being the capital of Europe. Thus the series of explosions in Brussels as claimed by Islamic State on last Tuesday thundered throughout the city killing about thirty persons and injuring more than 270 in a bloody carnage of fearful proportions. This dastardly attack is tantamount to singeing the lion's beard in his own lair. Such extra-economic adventures are sure to set back the business confidence of not only Europe but all around the world.
Another lingering cause for the weak global economic health is the continuing slowdown of the Chinese economy, the second largest economy of the world. It has thus been said that "the knock-on effect of a Chinese slowdown on the global economy" is significant. Besides a slowdown in the manufacturing sector, Chinese exports are also hurting badly. Fears are being expressed that the Chinese economic slowdown is not only painful it could lead to a recession in China.
Thus on Thursday, all the equity boards in America, the European as well as the Asian markets saw red splashed on their boards. In a reversal from the past few weeks when the equity prices remained quite stable and steady, many if not most of the global equity prices dropped from one to two percent.
The glaring fall in commodity prices and the strengthening of the greenback are hurting commodity prices remarkably. Moreover, the long Easter weekend is prompting many investors to stay on the sidelines till next week. The United States Federal Reserve is keeping its cards close to its chest so that the public at large remains unaware whether there will be one, two or three more interest rate increases this year (2016). Last not least, global terror problems, influx of refugees in Europe and fall in confidence in the existing global economic structure are hindering any quick economic recovery in the foreseeable future.
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