DR ZAFAR HASSAN

Cotton market continues to remain stable

LAHORE: Cotton market exhibited a steady posture on Thursday even though the volume of business was on the low side. Even though most of the seed cotton (Kapas/Phutti) from the current crop (August 2017/July 2018) has been sold out, about 400,000 bales (155 Kgs) of cotton are still reportedly lying unsold with the ginners.

Sindh styles of cotton were reportedly selling from Rs.6200 to Rs.7800 per maund (37.32 Kgs) on an ex-gin basis on Thursday, while the cotton from Punjab was said to be selling from Rs.6400 to Rs.7800 per maund even though the turnover was low. Traders said in Karachi that the quality of the leftover cotton is mostly of lower grade.

Water availability for the new cotton crop (August 2018/July 2019) has been low but now some irrigation water and rains have helped to start sowing gradually. According to one report, the Federal Agriculture Committee stated this week that the new crop has been estimated to be 14.37 million bales (170 Kgs) on an ex-gin basis.

According to brokers in Karachi, about 10 million bales (155 Kgs) from the new crop (2018/2019) in Pakistan is projected to be harvested in Punjab, 4.2 million bales are expected to be reaped in Sindh, 150,000 bales are expected to be obtained in Balochistan, while the output in Khyber Pukhtunkhawa province is likely to contribute about 20,000 bales.

In the evening, some reports indicated that yarn prices in the domestic market are improving and are doing better.

Other reports indicated that total exports of all goods from Pakistan till March 2018 have gone up by 23 percent from which the textile exports have gone up by 14 percent. Increase in textile exports are ascribed to better progress by domestic textile mills. Some reports added that domestic yarn prices are tightening.

India will sell about 200,000 bales of cotton to China because China is reported to have imposed 25 percent import duty on American cotton. As a result, the price of cotton in India has reportedly gone up by Rs.200 per Kandy.

On the global economic and financial front, the foremost topic remains the threats of a host of tariffs the Americans want to impose on Chinese products, and in return the Chinese declarations to impose counter-tariffs on American goods are becoming a risky game of vociferous blames and counter-blames between the two countries. This heated tete-a-tete between the Americans on the issue of imposing tariffs and counter-tariffs needs to simmer down to avoid a rejuvenation of an old style Cold War, or a Second Cold war as it as now being called.

As a result of these developments, America and China continue to announce what is being called tit-for-tat tariffs which threaten to pile up and escalate into a trade war which could certainly shake up the global economy.

Though occasional pronouncements by United States President Donald Trump as well as Chinese President Xi Jinping which are now and then forthcoming indicate that they would cut import tariffs which thus give confidence to the equity markets, but hitherto it has been seen that they renege on their earlier statements and again declare to reimpose high tariffs on imports between China and America.

In this context, earlier this week China again hurled a warning to America stating that trade talks with the United States are “impossible” under the prevailing conditions even after President Trump told the markets that the dispute with China could be sorted out. Besides flinging tirades against each other, no meeting between the two economic giants has materialized.

Other global issues include America’s desire to contain North Korea. It is believed that President Trump is seeking the good offices of China to put pressure on North Korea before the proposed summit meeting between him and Kim Jong-un, the North Korean leader.

Actually, some analysts have come to believe that America is no more the only superpower in the world and that China has slowly but surely reached a superpower status. Moreover, a volatile political situation in America has created a lot uncertainty in business and industrial circles.

On it part, the Federal Reserve in the United States has stated that the possibility of a trade war has posed “downside risks” to the American economy. The Federal Reserve reportedly fears that retaliatory tariffs by other countries could hurt the American economy sizeably.