Cotton market continued to remain under pressure as yarn prices are reported to be coming down and the Pakistani rupee has gained some value against the American dollar. Consequently, both seed cotton (Kapas/Phutti) as well as ginned cotton prices have relented.
According to trade in Karachi, seed cotton prices have gone down by about Rs 100 per 40 Kgs, this week, while lint cotton prices are reported to have gone down by Rs 200 to Rs 300 per maund (37.32 Kgs) this week. Arrivals of seed cotton have slowed down due to rains in some parts of the Punjab. Thus on Thursday, seed cotton prices in Sindh are reported to have ranged lower from Rs 4100 to Rs 4300 per 40 Kgs, while in the Punjab the seed cotton prices are reported to have ranged from Rs 4000 to Rs 4300 per 40 kilogrammes.
Lint prices in Sindh are said to have ranged lower from Rs 9000 to Rs 9100 per maund, according to the quality, while the cotton prices in Punjab also ranged lower from Rs 9000 to Rs 9100 per maund in a weak market. Though the global cotton prices are generally reported to be tight, domestic cotton prices still remain under pressure. Present estimate of the domestic cotton crop in Pakistan (2018/2019) is around 11.2 million to 11.5 million bales (155 Kgs).
August 14, 2018 is the Independence Day of Pakistan and is a declared public holiday. Cotton traders also said that rains have been reported to have fallen in some parts of Punjab which may slow down the cotton arrivals.
In ready cotton business reported on Thursday 200 bales each from Hyderabad and Sanghar in Sindh were sold at Rs 9000 per maund (37.32 Kgs), while 400 bales from Sinjhoro sold at Rs 9100 per maund. In the Punjab, 200 bales from Chichawatni sold at Rs 9150 per maund. Eid-ul-Azha is approaching and will probably be celebrated on the 22nd or 23rd of this month which could slow down business accordingly.
On the global economic and financial front, the American and Chinese tit for tat trade war continues unabatedly. In an earlier move, the United States imposed 25 percent duties on Chinese imports worth Dollars 34 billion. In a retaliatory move, the Chinese commerce minister has announced that it will start imposing 25 percent import duties on American goods worth Dollars 16 billion.
Furthermore, it has been learnt that America is further considering to impose tariffs worth another Dollars 200 billions of Chinese goods in coming September. It may be recalled that President Donald Trump began announcing new tariffs on imports at the beginning of the current calendar year viz 2018. The idea President Trump had in mind was to try and have what he deems are fairer and more equitable trade deals with other countries in an effort to what he would conceive as bringing jobs and increase industrialization on American soil.
In this effort to bring more jobs into America, it is becoming clearer that the imposition of more tariffs on imports by both China and America, both countries are likely to suffer immensely. It may be recalled, however, that Trump's trade disputes are not only limited to the Chinese, but they also extend to Mexico, Japan, Canada and beyond.
In this context, many observers feel that sooner rather than later, equity markets would slump. However, if the last seven months are any guide, scrips around the world have not only kept their upward momentum but have remained quite stable.
However, now more and more analysts and observers believe that the global trade could slither suddenly and sharply. There are already remarks made by some economists that Chinese banking is in deep trouble. Furthermore, there are reports that countries like Spain, Greece, Mexico, Venezuela and several others are in deep trouble. Are we then facing a deep global recession in the foreseeable future?