Cotton prices remain firm

08 Dec, 2017

Cotton prices in the domestic market firmed up on Thursday despite recent news that India has allowed exports from January 2018 to March 2018. This will enable local mills to make further purchases of good quality cotton from India which is presently economical due to proximity of Pakistan and India allowing for cheaper freight rates and quicker deliveries.
Though Pakistan is projected to produce anywhere from 11 to 11.5 million bales (155 Kgs) domestically, it will need to import about 2.5 to 3 million bales of cotton during the ongoing season (August 2017/July 2018). Imports may thus start from January 2018 from India.
Traders said in Karachi that the incoming cotton from the domestic supply during the current season (2017/2018) will deteriorate gradually as the season advances. According to cotton consultant Naseem Usman, Pakistan mills have already contracted to buy 300,000 bales from India. Earlier, the All Pakistan Textile Mills Association (APTMA) had urged the government to remove the restriction to import cotton from India. In total, about 800,000 bales are expected to be imported into Pakistan from India. Total cotton imports into Pakistan are likely to be upto three million bales during the current season (2017/2018).
On Thursday, seed cotton (Kapas/Phutti) prices in Sindh are said to have ranged from Rs 2700 to Rs 3200 per 40 Kgs, while in the Punjab they reportedly ranged from Rs 2700 to Rs 3300 per 40 Kilogrammes. Lint prices are reported to have increased by about Rs 100 per manud (37.32 Kgs) this week. Cotton prices from Sindh are said to have ranged from Rs 6200 to Rs 7050 per maund (37.32 Kgs) according to the quality. In the Punjab, they reportedly ranged from Rs 6100 to Rs 7100 per maund on Thursday in a tighter market.
A special grade of Balochi cotton constituting 400 bales is said to have sold at Rs 7250 per maund (37.32 Kgs). In other sales on Thursday, 600 bales of cotton from Alipur in Punjab reportedly sold at Rs 6900 per maund on an ex-gin basis.
Yarn prices have improved and the good mills are doing quite well. Other mills are also said to be improving their performance with better yarn sales. On the global economic and financial front, equity prices generally continued to hold their ground despite several political, social and other uncertainties. Indeed many areas around the world are witnessing unprecedented volatilities in several spheres of life.
In America, President Donald Trump is nearly competing his first year in office and continues to push and promulgate his own policies which he promised to implement during the course of his presidential campaigns. His political decisions carry his known brand of radicalism many of which were generally believed to be improbable. Despite the opposition of nearly the entire world, President Donald Trump opted out of the globally approved Climate Change Policy. The climate change policy evolved over a long period of time when most of the world, including America, signed the Paris Agreement to reduce emissions and also encouraging the formulation of long-term low emission development strategies under mutual cooperation between all the countries of the world. Paris Agreement also envisages creation of institutions and infrastructure for the larger reductions of emissions to enable industrial and other enterprises to achieve economic progress under safer and healthier conditions around the world.
Earlier, President Trump pulled out of NAFTA which the Trans-Pacific Partnership Trade Agreement signed by the United States, Canada and Mexico to establish a trilateral trade bloc in North America to eliminate barriers to trade and investment. He intends to renegotiate the terms of NAFTA. There are other steps he has taken and made decisions which President Trump states will inculcate his America First doctrine. Upto now, the world trade and businesses have taken the unilateral decisions of America in a stride and the sundry investors and their respective countries are watching the unilateral economic steps without any outward resentment, but later the global economic order could crack and send values of stocks and commodities tumbling. President Trump, however, has also targeted the Iran nuclear deal besides imposing a travel ban on certain majority Muslim countries which may also cause frustration in the Middle East and Africa.
Besides ending the Pax Americana and more recently recognizing Jerusalem as the capital of Israel, he is also talking tough to North Korea. Besides these developments, many countries in the world are drifting to the extreme right and are also challenging the status quo. In the meantime, several analysts believe that the Chinese economy is also unstable and its banking sector remains weak and vulnerable. Thus the global economy is saddled with too many uncertainties and problems which could cave in any time.

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