Cotton prices in the domestic market have jumped sharply by about Rs 1600 per maund (37.32 Kgs) within the past three weeks. The inexorable rise in lint prices have been due to lack of any carryover from to outgoing season (August 2017/July 2018), delay in sowing of cotton for the incoming crop (August 2018/July 2019), lack of irrigation water and late arrival of the rains.
The cotton prices in the domestic market have also risen due to rise in the international market, viz America, China and India over the past several months. The devaluation of the Pakistani Rupee in recent weeks and imposition of several taxes on cotton, energy prices and related imported materials for the cotton economy have also been responsible for the inflationary tendency in the Pakistani markets which have increased the prices of several goods and commodities.
General elections for the provincial and national assemblies are scheduled to be held on the 25th of July 2018, which will also reduce transport facilities for the cotton and textile industries in Pakistan. Thus the prices of seed cotton (Kapas/Phutti) from Sindh are said to have ranged from Rs 4000 to Rs 4500 per 40 Kgs, while in the Punjab the seed cotton prices reportedly ranged from Rs 3800 to Rs 4500 per 40 Kilogrammes in a very tight market.
Lint prices on Thursday from Sindh are said to have ranged from Rs 9300 to Rs 9400 per maund (37.32 Kgs) in a very tight market, while in the Punjab they extended from Rs 9500 to Rs 9600 per maund, according to the quality.
Global cotton prices have also been rising in recent months but they did not rise as in Pakistan. Furthermore, selling rates for yarns and other textile products have also gone up and are said to be still rising. However, several textile mills owners have reported that their units are in difficulty due to high cost of money, rise in cost of doing business and increase in the price of other inputs. Reports added that about 180 textiles units are closed and that some others may soon follow suit.
On Thursday, 200 bales of cotton from Tando Adam in Sindh reportedly sold at Rs 9300 per maund (37.32 Kgs), while 200 bales from Nawabad and 800 bales from Sanghar both sold at Rs 9500 per maund in a tight market.
On the economic and financial front, uncertainty reigned supreme following an unmistakable change in the buildup of the economic structure which was erected globally over the past seven decades. The ongoing change in the global economic mechanism which was gradually and steadily erected after the Second World War by the Allies which was later joined by China and also to some extent Russia and India became nearly universal with the passage of time. However, since the induction of President Donald Trump in America, a radical change has occurred in the working of global trade.
The first crack appeared in the prevailing free trade mechanism with the decision of the British electorate in June, 2016 to leave the European Unnion, or the so-called Brexit The latest report from the European Union leaders is the warning to its citizens that due to prolonged and hitherto fruitless negotiations with Britain, no deal for the exit may be forthcoming any time soon resulting in the prospects of British travellers to the Continent to need a visa. The fear of the European Union authorities grew after the Foreign Secretary Boris Johnson resigned from Prime Minister Theresa May's cabinet. Earlier, Brexit Minister David Davis had resigned creating chaos in Prime Minister Theresa May's cabinet.
In view of the messy situation prevailing in the European Union on the Brexit issue, the European Union thought it fit to secure its own trade and signed what is being termed as the world's largest free trade deal with Japan which reportedly covers about a third of the world's Gross Domestic Product which involves the participation of about 600 million people.
In the meantime, the tariff war between America and China is continuing in full swing. In this regard, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, has warned the global leaders that there are preliminary signs that global economic growth could decline and that the United States is "especially vulnerable" to undergo damage to its economy from the burgeoning global trade war. However, it appears that America and China continue to remain entangled in a damaging trade war which could conceivably sink the entire global economy. Lagarde has reminded us that already the economic growth is slowing in the Euro Area, Japan and the United Kingdom. We may remain alert and realize that the Sino-American tariff war will sooner or later damage most other countries around the world. Thus our businesses will be grossly destabilised.