Most of this week the domestic cotton market underwent a dull period due to lack of buying interest by the mills. Even though the leftover stocks from the current season (August 2017/July 2018) reportedly range between 150,000 and 170,000 bales (155 Kgs) neither the mills nor the exporters are showing any interest.
No doubt most of the leftover cotton stocks are of lower qualities, but the mills are mostly also abstaining from picking up even small quantities from this leftover stock. The Holy month of Ramazan has started this Thursday (17 May 2018) which generally signifies slowdown in normal business activity.
Today the domestic prices being under pressure, leftover lint both from Sindh and Punjab was reportedly being offered from Rs6000 to Rs 7400 per maund (37.32 Kgs) on an ex-gin basis. The tone of the ready cotton prices being offered were thus easy and dull with hardly any reported business since the inception of this week.
Till now the current crop output continues to be reported at about 11.58 million bales (155 Kgs). The new cotton crop (August 2018/July 2019) is reported to being planted over a larger area compared to the outgoing season, but shortage of irrigation water was being feared to be considerable and could undermine the projected output. Despite lack of any possible carryover of cotton into the next season, lint prices remain stagnant.
A positive factor is that a number of mills on our market are doing well. Recently, a countrywide slowdown in power supply due to outages arising out of breakdown in power plants and equipment has created fresh problems for the domestic industry. However, the government has promised to restore the power supply soon. In some areas, ten hours of load shedding is being reported. It has been reported that a major power break-down occurred throughout Punjab, Khyber Pukhtunkhwa, Azad Jammu and Kashmir and also in certain parts of Sindh and Balochistan.
In the afternoon, one transaction of ready cotton from Fort Abbas in Punjab was reported for the sale of 700 bales at Rs6400 per maund (37.32 Kgs).
On the global economic and financial front, a number of problems have crept up over the past year or two which coincide with the assumption of power by President Donald Trump in America. They are not all necessarily inter-related. Some recent economic and business news may be cited to appreciate political as well as social issues which have crept up since the past year showing dissensions between erstwhile partners and persistent adversaries.
Recently, economic growth in America slowed down to 2.3 percent reported a few weeks ago which was the slowest since 2012. Similarly, the British economy during the first quarter of 2018 slowed down and increased by only 01 percent. Serious economic problems have crept up in Venezuela and Argentina who now will have to refer their difficulties to the International Monetary Fund (IMF).
A more serious issue is President Trump's decision to withdraw the United States from the Nuclear Deal with Iran. In this case, the European Union's president Donald Tusk is reported to have urged different leaders from the Union meeting in Sofia, Bulgaria to form a United European front against Trump's withdrawal from the Iranian Nuclear Deal and his move to impose trade tariffs on Europe". Tusk is also reported to have compared the American administration to traditional enemies like Beijing and Moscow. Tusk has also been reported by the AFP to have said, "Looking at the latest decision of President Trump, someone could even think that with friends like that who needs enemies".
Then there is the problem of the deaths of many Palestinians in Gaza when Trump shifted the American Embassy to Jerusalem which has been vehemently opposed by the Europeans.
The problem with the Tweet diplomacy of President Donald Trump has been criticized by the economist Andrew Freris who said recently that "President Donald Trump "flip-flops so much on his stance over trade and tariffs with China that it's difficult to know what stocks to buy "and which to avoid". He has the uncanny habit of saying "yeah, yeah we'll punish you" and then "no, no we won't".
Not only China and the European Union, Japan is also considering imposing of tariffs on American exports of dollars 409 millions in retaliation against the aluminium and iron imposed by President Trump.
It is generally believed that the differences on the tariff issues are very wide and that America and China may not find a quick solution. These issues do not warrant that the world at large may relax and take them lightly, but that they need a high degree of attention.