Wednesday, September 20th, 2017
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Cotton market turned weak on Thursday on reported increase in cotton arrivals in Punjab. Moreover, some transport difficulty has started as trucks have been diverted to haul sacrificial animals from the interior to towns and citys of the country due to arrival of Eid-ul-Azha which will be celebrated in Pakistan from the first to the fourth of September 2017. Moreover, several mills have also earlier covered their cotton requirements in anticipation of the impending Eid Holidays. Thus seed cotton (Kapas/Phutti) prices were reportedly lower by Rs 50 per 40 Kgs, while lint prices generally were said to have conceded Rs 25 to Rs 50 per maund over the past few days.

Thus on Thursday the seed cotton prices in Sindh were said to have ranged lower from Rs 2700 to Rs 2800 per 40 Kgs, while the price of seed cotton from Punjab reportedly ranged from Rs 2600 to Rs 2800 per 40 Kgs in an easy market. Lint prices in Sindh were said to have also ranged lower from Rs 6050 to Rs 6100 per maund (37.32 Kgs), according to the quality, while in the Punjab they reportedly ranged from Rs 6175 to Ra.6200 per maund in a weak market. There were also some reports in the market that Punjab cotton plants were not developing well recently, but now they are doing better. Yarns and textile sales also not doing well and the sales were slow and listless. Even the cloth is not selling well despite a reported strike by the weavers since the past two or three weeks. There is even no regular lifting of fabrics despite a strike by the weaving sector.

The quality of cotton received till now is said to be alright. Even the second picking of cotton has reportedly begun in some main line stations of Sindh. In Pakistan, business will continue for about another week or so and then there will be holidays thereafter. It is believed that during the current season (August 2017/July 2018), Pakistan will reap between 12.5 to 13 million bales (155 Kgs) of cotton, subject to conducive weather.

On the global economic and financial front, the modest recovery seen since the inception of this year (2017) is indeed welcome, but we must still remain cautious from reading too much optimism in this positive change. There remain still several possible pitfalls in the growth of global recovery we see as several negative developments could yet forestall a modicum of economic recovery appearing since the beginning of this calendar year (2017).

To count a few, we may include Brexit, the unstable and isolationist pronouncements periodically coming out of a chaotic White House, the reportedly shaky situation prevailing in the Chinese banking system, in migration problems in several parts of the world and the isolationist and inward looking stance adopted by the United States coupled with Neo-Nazism in Europe and elsewhere. The discarding of Climate Change Agreement and the denouncement of NAFTA by President Donald Trump, the stability of the existing socio economic model is being discarded without putting another working model in its place. Oil prices were reported to be sliding on Thursday while isolationism in both the United States and the United Kingdom were gaining ground. Populism in the Western World viz. Europe and United States are rising continuously.

Then there will be the main issue at the Jackson Hole, Wyoming symposium as to how the Central Banks of countries such as the United States and Great Britain will start to pay back to end their enormous stimulus programmes. In this regard, Professor Alan Auerbach of the Department of Economics at the University of California at Berkley is reported to be worried that any unwinding of their lending through bonds purchases and other stimuli is likely to have a largely harmful impact on the global economies.

On its part, the International Monetary Fund (IMF) has cautioned that the credit growth in China is on a "dangerous trajectory". Last Monday the Chinese Ministry of Commerce is said to have expressed its "strong dissatisfaction with the U.S. approach to unilateralism and protectionism". Critics have claimed that President Trump is playing "bad cop" in NAFTA (North America Free Trade Agreement) negotiations. President Trump has himself said that "I think we will end up probably terminating NAFTA at some time..... personally, I don't think we can make a bad deal because we have been so badly taken advantage of". With this situation, world economic recovery does not appear imminent.

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