DR ZAFAR HASSAN
Cotton market gains stability
LAHORE: Some earlier gains in the price of international cotton and diminishing stocks from the current crop (August 2016/July 2017) in the domestic market to only about 160,000 unsold bales (155 Kgs) have been instrumental in increasing value of cotton and imparting a modicum of steadiness to the domestic market. The Karachi Cotton Association (KCA) increased the ex-gin price of Grade 3 cotton by Rs.100 per maund (37.32 Kgs) on Wednesday and Rs.50 per maund on Thursday pegging it now to Rs.6850 per maund in a stable market.
Ready cotton prices as offered by the ginners in Sindh prevailed from Rs.6500 to Rs.7000 per maund (37.32 Kgs), while in the Punjab they reportedly ranged from Rs.6500 to Rs.7050 per maund in a steady market.
New crop (August 2017/July 2018) cotton sowing is reported to be 70 percent complete with irrigation water availability having improved in recent weeks in both Sindh and Punjab. New crop sowing is reported to be good. Seed cotton from the new crop is expected to arrive in the ginning factories in modest quantities during the first week of July 2017. Partial ginning of the new crop cotton is likely to start during the first or second week of July 2017.
More sowing of new crop (20172018) cotton is said to be expected in the U.S.A., China, India, Australia and also Pakistan as compared to the outgoing season (2016/2017).
The containers strike at Karachi port which had paralyzed all import and export business for 10 days is now reported to be over and business will hopefully resume soon.
One sale of new crop (2017/2018) seed cotton (Kapas/Phutti) from Sindh was reported by the cotton brokers at Rs.3600 per 40 Kgs which would convert to a lint price for the new crop (2017/2018) to about Rs.7,200 per maund (37.32 Kgs).
Ready cotton business was reported to be slow as yarn business continued to remain in crisis leaving the spinners very unhappy. In fact, some smaller spinning units are reported to be closing down.
On the global economic and financial front, the talk of a worldwide economic collapse is being mooted increasingly and intensely. With the Trump White House being in disarray and equity markets having plunged precipitously at midweek, the current week promises to remain a precursor of a historical week which appears to have made a calamitous beginning towards an economic collapse around the globe.
Intensification of the Trump political turmoil with increasing talk of a Trump impeachment or resignation like the Nixon exit from the White House following the Watergate scandal is gaining ground. Moreover, the appointment of the much respected former FBI Director Roburt Mueller as special counsel to run the fed’s investigation to determine whether Russia interfered with last year’s American presidential elections which would also include “possible collusion between the Trump campaign and the Russians” has added gravity to the political heat in America. These developments are casting negative effects not only on the American economic domain but have rattled the global economy immensely. In America, the Dow Jones is reported to have suffered its worst day since last September, plunging by 373 points. Bloomberg has reported that major U.S. stock indices had the worst session in eight months. Volatility indices have jumped in the various markets indicating that stocks values are likely to remain under severe pressure for the foreseeable future.
The “Trump Slump” in America has gone viral globally as the boom in various equity markets, including the emerging markets, has gone bust as shares toppled like 10 pins last Wednesday. Last couple of days have seen high political drama in the United States and as a preliminary impression Donald Trump appears to have been encircled by his adversaries politically leaving him little space to exit his entrapment.
President Trump, besides his political adversaries, is also at odds with the American media whom he has denounced strongly blaming it for having treated him unfairly. It has also been alleged that President Trump has disclosed highly classified information to a Russian diplomat.
In this politically charged atmosphere, Trump did not appear to find ample time to address the subjects he had singled out earlier to push and propel the American economy like cutting taxes and implement banking reforms to boost the growth rate. Thus the equity markets fell sharply this week.
In conclusion, fears have been expressed that the current economic problems facing many countries are likely to be worse than what we faced during the emergence of the Great Recession of 2008.
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