Moreover, larger planting of cotton during the current year in the United States, China, India and Pakistan promise to deliver a larger quantum of lint fiber around the globe at relatively cheaper prices. Traders said in Karachi that recent slide in futures prices showed a decline from about 75 cents to nearly 69 cents per pound clearly creating a bearish global sentiment for the commodity. For the textile mills, therefore, it appears they will have ample cotton around the year because output has also increased during the current season (2017/2018) in China, India and Pakistan. This development entailing ample supply of cotton should put the textile industry in Pakistan and also in several other consuming countries on a sounder footing.
Reports from India indicate that higher acreage and better yield prospects will enhance the fiber output to a higher level. Reports from China also speak of a higher cotton output which could decrease the damage for cotton for the near future. On Thursday, the seed cotton (Kapas/Phutti) prices reportedly moved lower by about Rs 100 per 40 Kgs and ranged from Rs 2550 to Rs 2750 per 40 kilogrammes. In the Punjab, seed cotton prices are also said to have ranged lower from Rs 2550 to Rs 2800 per 40 kilogrammes.
Lint prices in Sindh reportedly ranged from rs.5850 to Rs 6050 per maund (37.32 Kgs), while in the Punjab they are said to have ranged from Rs 6000 to rs.6100 per maund on Thursday, according to the quality. The total output for the current season in Pakistan (2017/2018) is expected to range from 12 million to 12.5 million bales (155 Kgs). Though cotton prices were slightly steady today, it is generally believed that the cotton market may remain on the weak side. Some exporters were also active in the market.
On the economic and financial front, we have seen a general rise of confidence pertaining to economic growth in several parts of the world. Besides the United States and Europe, hopes have also been expressed that the Emerging Markets would also show a notable growth in their economies. Thus early this week the sundry bourses in several parts of the world show notable increases in equity values.
The central banks, however, looked at global economic growth with a pinch of salt and thus advised their constituents, not to raise interest rates speedily, lest economic growth in various countries and regions is confronted with any setback. Indeed several economists and observers would rather raise the interest rates slowly to avoid any early setback to the growing global economy.
There are reports that several policy makers of the Bank of England are indicating that they are considering a rise in interest rates for the first time after more than a decade. Speculators in the market went so far as to presume that interest rates in Britain may be raised before the closing of this calendar year to avoid any inflationary situation.
On the other hand, it has been reported that if the economic growth continues at a positive pace, the first interest rate rise in Britain could be earlier than expected. In a report produced by Lucy Meakin and Jill Ward updated recently, it is conceded that "Brexit means considerable risk's to economic outlook remain".
Besides purely economic considerations which determine economic growth, political developments play a significant role in shaping the economy of the world. These days nuclear explosions experimentation in North Korea and flinging long-range ballistic missiles in the direction of the Korean Peninsula and Guam are also negatively correlated to managing the global economy.
Besides the North Korean conundrum, the wrath of Hurricanes Harvey, Irma and now Jose have also to be considered into the economy of America and the Gulf of Mexico, besides the Caribbean Islands. Anyhow, till the last reported information, the standing cotton crop in Texas, Louisiana and the Carolinas has not been as badly damaged as envisaged earlier.
Copyright Business Recorder, 2017