Cotton prices were reported to be fully steady to strong on Thursday even as volume of business was said to have been of moderate proportions. The New York March 2018 futures for cotton contract No. 2 having surpassed 82 cents per pound at one juncture led local prices to maintain their high posture. Reports added that cotton prices in India and China have also gone up appreciably.
On Thursday the seed cotton (Kapas/Phutti) prices both in Sindh and Punjab were said to have ranged from Rs 2800 to Rs 3500 per 40 Kilogrammes. Lint prices in Sindh as well as in Punjab reportedly ranged from Rs 6500 to Rs 8000 per maund (37.32 Kgs) even though the volume of business was said to have been low.
Textile circles indicated on Thursday that yarn prices are also very tight. Recent devaluation of the Pakistani rupee has led to increase the price of imported cotton. The United States dollar has now reached close to Pakistani rupees 113 which, however, help the textile industry in its export proceeds in such items like yarn and fabrics.
However, those mills which have booked cotton for imports and not covered their exchange rate will have to pay more for their imported cottons. Till the evening, 400 bales of cotton from Sakrand in Sindh are said to have been sold at Rs 7200 per maund (37.32 Kgs), while 1000 bales of cotton from Jalalpur Jattan were said to have been sold at Rs 7600 per maund in a firm market.
In other news, it has been reported that cotton cultivation is losing its acreage to sugar cultivation. Thus the total output of cotton in Pakistan has gone down and domestic textile mills are compelled to import more cotton. Thus the shifting of acreage from cotton to sugar cane and maize is very detrimental to the textile industry, the largest exporting sector in Pakistan.
In other news, the Pakistan Textile Exporters Association (PTEA) has complained to the government stating that the textile industry in Punjab has become the victim of discriminatory policies. The PTEA has complained that the disparity in gas prices has eroded the competitive edge of the largest employment generating Punjab based textile industry which is compelled to use high priced RLNG, bearing almost double burden as compared to Sindh and Khyber Pukhtunkhwa. The PTEA has pleaded for the imposition of a cohesive policy for the supply of energy inputs ensuring equal prices across the board and the removal of disparity among provinces regarding gas prices.
On the global economic and financial front, the outgoing year, viz - 2017 has done remarkably well in many parts of the world. Moreover, the mood of the investors remains quite positive as they apparently foresee a further rally on the equity markets. In fact, Goldman Sachs has already forecast a bullish performance on the stock market during the year 2018.
In fact, it has also been reported that "strategists at BMO, UBS, Deutsche Bank and Credit Suisse have called for double-digit returns in 2018". The reasons given for continuing rise on the equity markets include a sizeable decrease in tax rates in the United States, slow increase in interest rates by the central banks and appreciably high profits being prudently reaped by the corporate sector.
While the optimists remain exuberantly hopeful that the year 2018 is headed for a repeat performance similar to the previous year (2017) which saw the bourses post profits exceeding twenty percent, some strategists believe the equity values will stay put at around the current levels. Anyhow, there are only few forecasters, if any, who presently see a big drop in equity prices.
Of course some investors even see certain corrections on the equity markets, but they also believe that a widespread global improvement in business will keep the equity markets at steady levels even if they do not go up sizably. Though nothing concrete has emerged concerning the Brexit impasse, there remain hopes that the European Union and the United Kingdom will find some modus operandi to settle the issue.
Similarly, the recent agreement between North Korea and South Korea to hold official talks was scheduled for this week, the first such move in more than two years. This development should also calm down fears of war and provide more impetus for better economic growth globally.
Crude oil prices are also holding at higher levels which should provide more impetus to the oil producing countries. In Japan, the manufacturing activity rose to its fastest pace in nearly four years in December 2017. Even a solid growth in the British industries sector during November 2017 has been reported following a global economic upturn. In this regard, it is for the first time in many years that the World Bank has forecast a better outlook for the global economy as all the regions have shown improved growth.
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