Sharp rise in cotton prices

Cotton prices have risen sharply since the beginning of this month by about Rs 1200 to Rs 1300 per maund (37.32 Kgs) in the ready market. Due to the devaluation of the Pakistani rupee obtaining currently at Rs 133 to Rs 134 against the American dollar and a shorter crop, lint prices have moved up. This season (August 2018/July 2019) it is expected that Pakistan will produce nearly 11.5 million bales (155 Kgs) on an ex-gin basis,
This week seed cotton prices are said to have risen by about Rs 200 to Rs 300 per 40 Kgs, while lint prices have reportedly gone up by Rs 300 to Rs 400 per 40 Kgs in a very tight market so that domestic mills are importing sizeable quantities of cotton.
Thus on Thursday, seed cotton (Kapas/Phutti) prices in Sindh are said to have extended from Rs 3900 to Rs 4400 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4400 per 40 Kilogrammes.
Lint prices in Sindh are said to have extended from Rs 8500 to Rs 9100 per maund (37.32 Kgs), while in the Punjab they reportedly ranged from Rs 8700 to Rs 9100 per maund in a very firm market.
In ready transactions on Thursday in Sindh, 400 bales of cotton from Mirpur Mathelo are said to have been sold at Rs 9100 per maund. In the Punjab, 200 bales from Khanewal and 400 bales from Shadan Lund both sold at Rs 8900 per maund, 200 bales from Rahimyar Khan sold at Rs 9000 per maund and 1,000 bales from Harunabad sold at Rs 8950 per maund.
In its cotton arrivals report upto the 15th of October 2018, the Pakistan Cotton Ginners Association (PCGA) has shown the current year's (August 2018/July 2019) arrivals at 6,044,194 bales against last season's arrivals at 5,984,486 bales, while the exporters have lifted 75,797 bales only. Ginners are holiding an unsold stock of 1,636,558 bales.
Domestic spinners and textile mills are now doing well due to several positive measures taken, by the government which is expected to boost exports and also put the domestic textile industry on a sound and stable footing. Thus the Pakistani mills have now started to function on a more profitable basis which is also expected to assist the mills in expanding and modernizing their units.
On the global economic and financial front, generally most news appeared negative with a tendency to get worse. The tariff war which started between America and China earlier during the year is slowly but surely going global. In fact, several other countries in different parts of the world are being seriously hit as their economies are increasingly being hurt due to escalating fears and concerns of the investors that the health of the global economy is faltering sharply.
In fact, most if not many economic analysts and assessors now believe that the global economy has already fallen into a dismal situation from which it is not in a position to extract itself easily. Added to the burgeoning global trade war, there are other serious economically linked political problems such as Brexit, the rise of the political right and populism, the currency turmoil in countries like Turkey, Venezuela, Pakistan besides the Chinese Yuan which touched its weakest level in two years. There are also lurking fears in credible circles in the ruling elites around the world that it may become impossible for America and China to contain their trade war within the domestic domain so that their ongoing hostilities will intensify their confrontation into a full scale war.
On the Brexit issue, on Thursday the European Union and the United Kingdom had still not reached a workable agreement for the UK's transition out of the European Union. Earlier during this week, Ms. Teresa May was reported to have requested the 27 leaders of the European Union to become more flexible and allow more time to end the Brexit deadlock. However, many analysts failed to see an early solution to the Brexit issue which is also intensifying global economic tensions seriously. Thus the global economy is already in the throes of a serious recession which could be more damaging than the Great Depression of 1929.
Other related issues which are shaking the global economy dangerously include the volatility in crude oil prices as well as the failing feasibility of the American shale oil industry, the increasing weakness of the American housing market, the slump in Japanese exports as trade war fears mount, the insistence of the American Federal Reserve to continue raising interest rates, fall of business confidence globally and a broken relationship between America and its long term ally Saudi Arabia. Thus any remaining hopes that the global economy will resuscitate itself any time soon are nearly non-existent.