The cotton lying unsold from the outgoing crop has little offtake as the new crop (August 2018/July 2019) is trickling in and it is hoped that the output of the new crop will increase gradually over the forthcoming weeks. The old crop, both from Sindh and Punjab, is finding few buyers and is generally priced between Rs 6000 to Rs 7600 per maund (37.32 Kgs), according to the quality.
For the forthcoming crop (August 2018/July 2019), the target was set by the government at 14.3 million bales (170 Kgs), but due to lack of irrigation water and rains in Sindh it has now been reduced to 12.5 million bales (170 Kgs). Now the water supply has reportedly improved in Sindh. Shortage of water was reported in lower Sindh and the Sanghar district. Upper Sindh and Nawabshah district were not affected. Hot weather also delayed sowing in Sindh.
The new crop (August 2018/July 2019) seed cotton (Kapas/Phutti) is reported to be selling from Rs 3800 to Rs 4000 per maund (37.32 Kgs). About 8 to 10 ginning factories in Sindh have started pressing the new crop (2018/2019) cotton and have sold about 2500 bales for delivery over the next few days at prices reportedly ranging from Rs 7800/8000 per maund (37.32 Kgs) on an ex-gin basis.
Yarn and textile sector are projected to do well due to the devaluation of the Pakistani rupee against the greenback so that the dollar is now said to be priced at about Pakistani Rupees 125 on the free market.
Cotton futures prices in New York were said to have conceded about 10 cents a pound over the past one week or so and were prevailing below 84 cents per pound. The volatility in the market is being ascribed to politics in America rather than the exigencies of supply and demand.
On the global economic and financial front, the on-going tirades being traded incessantly between the United States and China show little hope of settling down at present. American President Donald Trump appears more and more serious about slamming import tariffs not only on China but also on the European Union, Canada, Mexico, the United Kingdom and in most other parts of the world, several investors now appear to be taking him seriously. This is leading more and more investors to take a more negative view of global trade.
The White House is reported to have announced recently that the "Chinese economic aggression is a global threat". Such a situation reflects an obvious fear in global markets so that the investors have not only become cautious but have started to see that the boom cycle on the global bourses is henceforth short-lived.
Early on Thursday, it was reported that in line with the falling shares prices in Asia and Europe, the American equity futures prices also started sliding on Thursday. The news from Italy that two leading euroskeptics were given key roles in the Italian Parliament added to the apprehensions of the investors who were already worried about the disintegration of global trade.
Investors were questioning as to how long the upturn on global equity markets could last with deeply troubled global trade situation and increasing political tensions between America, China and resultantly the European Union and the Emerging Markets. It is not only the equity markets which are facing the fierce battle of tariff imposition between the bigwigs like America and China, but commodities like cotton, crude oil, iron and aluminum are also facing the brunt.
On this account, it was reported that the European Union (EU) is fully prepared to launch a large number of retaliatory tariffs against exports from the United States this Friday. This step appears following the imposition of high rates of import duties on aluminum and steel arriving from the European Union. On its part, European Commissioner for Trade Cecilia Malmstrom confirmed that American exports such as blue jeans, motorcycles and bourbon whiskey will be targeted for import tariffs as a countermeasure.
Thus it may be mentioned that the American tariff war with China and the European Union is going global providing increasing volatility in international trade from South East Asia, South Asia to South America while the Middle Eastern countries like Turkey are already battling with American tariffs. There is nothing but hopelessness in escalating tariff war which has engulfed the world.