Wednesday, September 20th, 2017
Home »Cotton and Textiles » Cotton Analysis » Cotton prices continue to rise
Cotton prices have continued to harden since the beginning of this week. Due to regular rains drenching several parts of the cotton belt, supply of seed cotton (Kapas/Phutti) of the new crop (August 2017/July 2018) has decreased for the time being leading to increase in seed cotton as well as lint prices.

Seed cotton prices in Sindh were reported to be prevailing between Rs 3150 and Rs 3250 per 40 Kgs and between Rs 3000 and Rs 3225 per 40 Kgs in the Punjab. Punjab seed cotton is said to contain a modicum of moisture in it. Due to tight demand position, lint asking price is now said to be Rs 6400 per maund (37.32 Kgs), which ranged between Rs 6200 and Rs 6300 per maund earlier.

Overall, the quality of new crop cotton (2017/2018) is being described to be alright. Sowing has been satisfactory for the new crop and an output between 12.5 and 13 million bales (155 Kgs) is being presently anticipated which will be about 12 percent more than the last season. As of now, about 50 ginning factories are pressing the new crop in Pakistan. Some ginning factories are ginning partially, while the others are running fully. As of now, about 70,000 bales of new crop cotton have been pressed by the ginners.

Domestic mills/spinners mostly continue to suffer losses and cannot make ends meet at a cotton cost of Rs 6400 per maund on an ex-gin basis. Demand for cotton is steady due to tight supply. However, with the advance of the season, prices of cotton may go down.

Good output of cotton is anticipated of in the U.S.A., China and India and thus the global output is expected to be satisfactory. Thus under present conditions cotton prices may mostly remain at current levels for the time being.

Stock market has suffered a sharp decline in Pakistan in recent days and equity prices have fallen sharply. A large number of textile mills are listed on the equity market whose shares have also suffered losses.

On the global economic and financial front, observers set their attention mostly on last week's G-20 conference in Hamburg in Germany to look for any clues which would shed any light on the future global economy and also on the contentions of President Donald Trump to ascertain the possible approach America would adopt in pursuing its economic goals.

In this connection, it became clearer that America would not continue to support the Paris climate change agreement and would also adopt a more isolationist policy concerning its trade with the world. In this regard, such a policy change by America brought discomfort and surprise to the free world, but gradually the economic blocks like the European Union and countries like China and Japan appeared to gradually accept the drastic change adopted by America on these issues and started to look for ways and means to live with the changed reality.

At first, the members of G-20 deemed America's withdrawal from the climate change agreement and also a new policy of isolationism leading to abandoning of free trade as a turning point which would push the world towards a new and dangerous phase. America is also weary of the increasing number of immigrants arriving in the United States, particularly more so from Russia which could increase spying activity in America.

In Europe, the immigrants from eastern and central Europe are moving to Western Europe which also created a large shortage of workers in Eastern Europe which is hurting the economies of Eastern Europe largely. Such global changes are transforming the socio-economic condition of several countries which are losing factory workers migrating to other countries.

It may also be mentioned here that the G-20 meeting held in Hamburg last week-end did not go smoothly. Very large number of protesters created havoc and rampaged all over Hamburg during the two-day meeting of the G-20 member delegates. Serious clashes were reported to have continued even after the meeting by protestors who protested against the inequality of incomes between various sections of societies. For more than two days the streets of Hamburg had turned into a battle ground by the irate protesters.

Protesters are reported to have used Molotov cocktails during the round-the-clock violence. Protests in America, Europe, Venezuela, Brazil, South Africa and elsewhere in the world are being held regularly and it remains anybody's guess where this interminable activity will lead us to.

Copyright Business Recorder, 2017

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