According to the brokers, most of the leftover crop is of good grades. Because of low availability of good cotton in the domestic market, the Karachi Cotton Association (KCA) deemed it fit to fix the ex-gin price at Rs 6800 per maund on Thursday which is an increase in price by Rs 50 per maund (37.32 Kgs). Prices of yarns and textiles are also said to be increasing.
Sowing of new crop cotton (August 2017/July 2018) in the southern areas of Sindh in modest quantities has started. The sowing in lower Sindh has begun in Badin, Digri and Jamesabad areas. Punjab sowing of cotton will only start at the middle of next month viz 15th of April 2017. Almost all of current crop (2016/2017) cotton will have been sold out in the foreseeable future as yarns and textile prices have moved up modestly. This year most of the growers reportedly made good profits so it is being deemed that they will plant a larger crop for the forthcoming season (2017/2018).
Seed cotton (Kapas/Phutti) from the current crop (2016/2017) in Sindh has been sold out. In the Punjab seed cotton is reported to be selling from Rs 3750 to Rs 3800 per 40 Kgs in a tight market. The prices of pressed cotton from Sindh were reported to have ranged from Rs 6400 to Rs 7100 per maund (37.32 Kgs), while in the Punjab lint prices are said to have extended from Rs 6500 to Rs 7100 per maund in a well held market.
On the global economic and financial front, some improvement in certain countries appears to be impressive, but certain difficulties, anomalies and possible pitfalls can hurt continued economic growth seriously being vulnerable to notable low productivity, growing protectionism and market volatility. In this regard, Mark Deen from Bloomberg points to the recent warning issued by the Organisation for Economic Co-operation and Development (OECD) that "the global economy may not be strong enough to withstand risks from trade barriers, overblown stock markets or potential currency volatility".
In a news item datelined Paris, OECD chief economist Catherine Mann observed that higher interest rates in the United States could trigger "damaging volatility on the financial markets for some borrowers while potentially pushing the dollar higher". President Trump is confident that he is the master of all he surveys and wants to reshape the global economy and the socio-political structure to his heart's desire.
President Donald Trump's new vision includes his ideas for rectifying and improving the existing terms on which America's economic relations and trade pacts are operating with other countries. However, America may justifiably call for improving terms of business which appear lopsided and unilaterally against American interest. Some observers fear that such an approach could reduce or minimise free global trade. Already some major businessmen in America are fearful that any trade policy biased largely or solely in the interest of America may not be workable in the long term
OECD has also stated that the financial markets are overblown and thus have become disconnected with the (prevailing) economic reality. Furthermore, the anticipated rise in interest rates by the American Federal Reserve could create "exchange rate swings" which could adversely affect the private sector borrowers who are large borrowers and have hitherto capitalised on cheap borrowing rates.
Additionally, the recent bravado has been displayed by North Korea and the ensuing rising tensions in China, South Korea and Japan also saw retreat in equity values earlier during the week. Moreover, domestic tumult in American politics including disarray within the Republican Party in America could disturb any economic progress which was earlier being foreseen in the United States. Investors in America and elsewhere hope that President Trump would not press for isolationism to a breaking point.
Other problems hindering global economic growth include what Transparency International calls widespread bribery and other forms of corruption which are denying fair inputs into public health programmes and education to the masses. Trade wars, isolationism and aggressive trade retaliation measures could shelter any existing trade agreements and understanding.
Copyright Business Recorder, 2017