Wednesday, September 20th, 2017
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Stable condition reportedly continued on the cotton market on Thursday as prices mostly were maintained at their earlier levels. However the Karachi Cotton Association (KCA) reduced the ex-gin price of the Grade 3 cotton by Rs 50 per maund (37.32 Kgs) on an ex-gin basis and fixed at Rs 6300 per maund on Thursday. The new crop cotton (August 2017/July 2018) was said to be progressing mostly on normal basis besides a delay of about two or three weeks due to the continuing rain spell. Till now no large damage has been done to the crop except that there is some presence of moisture in the Sindh styles which are therefore, selling at discounts presently.

Rains could last another couple of weeks. Presently, six or seven ginning factories are pressing the new crop (2017/2018) in Punjab, where as upto 50 ginning factories are operative in Sindh where some interruption occurs in case of excessive rains. Lint from Sindh is somewhat discounted compared to the Punjab styles in case of extra moisture. Thus the current rates of lint from Sindh reportedly range from Rs 6300 to Rs 6350 per maund (37.32 Kgs), while in Punjab the cotton prices reportedly range from Rs 6550 to Rs 6600 per maund, according to the quality. Smaller spinning mills and the needy mills are mostly picking up the new crop and even pick up moist cotton with appropriate discounts.

Rains have till now been mostly beneficial to the crop (2017/2018) and could still yield between 12.5 to 13 million bales of cotton (155 Kgs) on ex-gin basis if no further damage occurs. This would mean that Pakistan could reap one million more bales of cotton in 2017/2018 compared to the outgoing season (2016/2017) if all goes well.

Domestic textile industry in Pakistan is suffering one of its worst periods due to faulty government policies as reported by the All Pakistan Textile Mills Association (APTMA). Therefore a sizeable portion of the domestic textile industry remains inoperative since the past several years. High taxes and also high cost of bank credit, lack of power supply besides high cost of imports and short supply of gas and power are hurting the Pakistan textile industry. In ready sales reported till Thursday evening, 200 bales of cotton from Kotri in Sindh were reported at Rs 6350 per maund (37.32 Kgs), while 200 bales from Chichawatni in Punjab sold at Rs 6675 per maund. Global cotton prices are also reported to be stable.

On the global economic and financial front, shares prices have shot up on many bourses around the world after mostly lying in limbo for almost a decade following the Great Recession in 2008. Wall Street shoot up in shares prices has been described by analyst Matt Egan as being comparable to Raging bulls - even though today's record-high stock market isn't as outrageously expensive as it was in early 2000. It is being questioned whether the "stocks are too hot" at present. The obvious fear is "whether the second longest bull market in history has gotten a bit too hot."

Some analysts are wondering whether the current meteoric rises in equity prices have been pushed up beyond any reasonable heights and if the rise in the value of the equities has any reason of rationale. Of course there are other observers in the market who deem that the current rise in share prices on Wall Street is not tenable.

There are yet other operators in the market who cite strong corporate earnings that have provided a boost to all the three major indices on Wall Street, namely Nasdaq Composite, Dow Jones and the Standard and Poor's 500. Some eye-catching headlines in the media do indicate the excitement and euphoria prevailing in the sundry markets which provide the reason for their jubilation. The equity markets are also showing similar exultation in Europe and elsewhere in several parts in the world.

In the United States, "Strong earnings help as all three major indexes hit records". In Tokyo, stocks prices shot up "on Wednesday following a string of positive data from Europe and the United States as well as strong earnings while a jump in commodity prices lifted energy firms". European shares also rose as the earnings and strong results continued to pour in.

Other reports referred to a rise in new home sales in America during June to ten years high level even though the market was struggling to gain momentum over the previous three months. Record profits were also reported by Peugeot in France and Boeing in America whose shares climbed record high to nearly eight percent. Even the NSE index in India reportedly rose by 0.56 percent on last Wednesday and ended above 10,000 points for the first time ever.

However, there are analysts who are of the view that increase in equity values, in some cases to record levels due to some positive indicators are unreasonably high, but such share increases have also made them quite vulnerable. Even with sterling performance in many sectors of the economies of America and Europe, the central bankers like Janet Yellen of the Federal Reserve System in America and Mario Dragi of the European Central Bank are advising caution before America and Europe may increase that interest rates rapidly.



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