DR ZAFAR HASSAN

Tight condition on cotton market

LAHORE: In line with the firm global cotton prices, domestic lint prices were also notably tight on Thursday. Recent rains in the U.S.A., rains and late cotton arrivals in India and decreasing inventories in China have all added up to tighten global fiber prices. In some Sindh cotton areas like Umarkot, Sanghar, Jamesabad and Badin, reports of pink boll worm infestation have been received in the Punjab, reports of whitefly presence have been received from Vihari, Burewalla, Mailsi and Kahror Pucca. Crop in Pakistan is estimated to be about 12 million bales (155 Kgs).

Prices of better quality seed cotton (Kapas/Phutti) have increased this week by Rs.150 to Rs.200 per 40 Kilogrammes. Lint prices also increased by Rs.200 / Rs.250 per maund (37.32 Kgs) in Sindh and Rs.300 per maund in Punjab for the higher quality of cotton.

Thus in Sindh the seed cotton (Kapas/Phutti) prices are said to have ranged from Rs.2800 to Rs.3250 per 40 Kgs, according to the quality on Thursday, while in the Punjab they reportedly ranged from Rs.2900 to Rs.3250 per 40 Kgs. Lint prices were up by Rs.200 / Rs.250 per maund in Sindh and were said to have ranged from Rs.6100 to Rs.6350 per maund (37.32 Kgs), while in the Punjab they reportedly extended from Rs.6450 to Rs.6500 per maund in a tight market.

Seed cotton about 2.3 million bales (155 Kgs) of cotton are estimated to have arrived into the ginning factories upto now pertaining to the current crop (August 2016 / July 2017). From this quantity, about 1.5 million bales are said to have arrived in Sindh and nearly 800,000 bales in the Punjab province. Mills are said to have purchased about 2 million bales locally. Exporters are said to have lifted nearly 50,000 bales, while the ginners are said to be holding about 250,000 bales of unsold cotton with them. Mills in Pakistan are believed to have booked 13 million bales for import. The tone of the domestic market was described as being quite tight.

Textile mills in Pakistan are said to be mostly functioning poorly and have asked the government to rationalize the taxes, pay their eligible refunds speedily and decrease the high costs of inputs and bring them down to the level of other textile producers in the region. It has been reported that due to losses being sustained by the domestic textile industry, nearly half a million workers have lost their jobs.

Death has occurred of Mian Enam Ellahi, on 20 September 2016 in Lahore. Mian Enam Ellahi was the Chairman of Nagina Group, a distinguished textile group holding large interests in textile and other businesses. The late Mian Enam Ellahi belonged to Chiniot and was widely respected in the business community.

On the basis of the result of Election of the Executive Committee and Office Bearers of the KCA, the composition of the Executive Committee of the KCA for the year 2016-17 would be as under :

Mohammad Atif Dada, Chairman, Humayun Zafar, Senior Vice Chairman, Rizwan Iqbal Umar Vice Chairman, Aftab Umar, Asif Inam, Imran Maqbool, Jahangir Moghul, Nadeem Maqbool, Nasir Anwar Barkhurdaria, Rehan Shoukat, Parvez Hassan, Shahid Shafiq, Sajid Haroon, Wahid S. Balagamwala, Zahid Mazhar,

In Addition to the above Members of the Executive Committee, Khawaja Tahir Mahmood, would also serve as Ex-Officio Member on the Executive Committee of the KCA for the year 2016-17.

On the global economic and financial front, it is now glaringly clear that the entire gamut of monetary, fiscal, pecuniary, banking, business and sociopolitical order is all shook up threateningly, menacing the established civilized makeup of the world. Too many fissiparous tendencies are not only dismantling the purpose of joint human endeavour speedily, the world has splintered multidimensionally leaving little hope to continue and enjoy the fruits of collective efforts towards common human good and continued progress.

This week mostly saw equity and oil prices rose again after the United States Federal Reserve did not increase the interest rates, clearly demonstrating that it believes that the American economy has many miles to go before the economy starts performing positively. The Federal Reserve did project a nominal rise in the American economy during 2017 and 2018, but it has scaled down its hopes for any betterment in the longer term.

At midweek, it was not only the U.S Federal Reserve that postponed the idea of increasing interest rates at this juncture in the face of a mighty political event in the United States viz. the American elections in early November, 2016. This step may indicate that Federal Reserve Chair Janet Yellen wanted to stay clear of any insinuations regarding politics in America and the Federal Reserve which is legislatively a bipartisan institution as it stands today.

On its part, the Bank of Japan unveiled fresh steps to stoke inflation into the Japanese economy. It appears that the major central banks around the world are acting in unison to prop up their countries’ economies but such steps like keeping very low or even negative interest rates indefinitely cannot be sustained. It appears that the central banks may wish to keep low interest rates for a long time to come, which would be a folly. The pursuit of achieving higher inflation by keeping low interest rates cannot be sustained indefinitely.

Thus global stocks prices have risen hand in hand with the bonds as the U.S. Federal Reserve has acted as the cheer leader this week inspiring a world-wide rally following the Federal Reserve meeting on Wednesday deciding not to increase interest rates, which may yet be increased around end of December, 2016. It is also believed that lower interest rates will increase employment.

In other news, President Obama has urged China to reduce its surplus productive capacity. Chancellor Angela Merkel of Germany has said that the world will face a serious time when we move towards implementing the Brexit vote which may be undertaken in early in 2017. Wall Street bosses have warned of a serious situation which may arise in the City (London financial district) as fallout from Brexit. It is also believed that the health of the Chinese banking is precarious.

The Organization for Economic Cooperation and Development (OECD) has warned that “global economic growth will flounder this year and next at rates not seen since the financial crisis (2008-2009) as the march of globalization grinds to a halt”. The message of an impending global economic disaster is loud and clear.