On the domestic cotton market, despite the fact that cotton consumption this year (August 2018/July 2019) may range between 14.5 and 15 million bales (155 kgs) and the production in Pakistan could range from 10.5 to only 10.75 million bales, cotton prices remain mostly listless.
Exports from Pakistan during the current season (August 2018/July 2019) could range from 100,000 to 200,000 bales impelling the domestic mills to import 3.5 to 4 million bales during the current season. Indeed yarns prices are reported to be under pressure in the current situation. Thus raw cotton prices are obtaining at low levels.
Reports from Karachi add that yarn and textile buying on the export market remains mostly dull. Several textile mills are reported to be carrying considerable quantities of unsold yarns in their stocks which kept accumulating.
The price of seed cotton (Kapas/Phutti) extends over a wide price range depending upon the quality. Thus both in Sindh and Punjab seed cotton (Kapas/Phutti) prices range from Rs 3,000 to Rs 4,000 per 40 kgs, depending on the quality.
Lint prices in Sindh are said to have ranged from Rs 7,500 to Rs 9,000 per maund (37.32 kgs), depending upon the quality. In the Punjab, ginned cotton prices reportedly ranged from Rs 7,000 to Rs 9,000 per maund on Wednesday. Under the circumstances, ginners are also reported to be carrying sizeable quantities of unsold cotton with them.
The Karachi Cotton Association (KCA) has welcomed the directives given by Prime Minister Imran Khan to the Ministry of National Food Security and Research to take adequate measures to achieve the production target of 15 million bales of cotton and to set up a working group to revamp existing Seed Registration Institutes to bring improvement in their outputs.
The Karachi Cotton Association (KCA) has added for the due and timely attention of Prime Minister Imran Khan that actually a production of 20 million bales of cotton are urgently required not only to meet the needs on the domestic textile industry but also to produce an exportable surplus to meet the urgent requirements of foreign exchange for the country. Stress has been laid by the KCA to ensure availability of Certified Cotton Seeds including those for BT cotton and also extend cotton cultivation to Balochistan and Khyber Pakhtonkhwa provinces.
On the global economic and financial front, the current year viz. 2018 has been designated as the worst year since 1931 following the sharp decline in global equity values. There are always several reasons given to explain why the massive fall occured in equity markets.
The biggest reason appears to be that they are usually overdone with a large dose of speculation. In the instant case of the fall of values in the Asian markets earlier week followed by Europe and America, it was a chain reaction ultimately enveloping the entire globe. On Christmas Day last Tuesday, Japanese and Chinese markets initiated the downside on the equity markets which later grabbed both the European and American markets eventually to record a global decline in the share values sharply.
American stocks which remained negative on Tuesday night showed a gain later on Wednesday. President Donald Trump stated the Federal Reserve Bank had raised the interest rates too early and blamed the Federal Reserve Chief Jerome Powell for the decline in equity values. Incidentally, earlier on last Sunday American Treasury Secretary Steven Mnuchin had issued a statement informing that he had checked on the working and health of the American banks and was satisfied on that account.
Besides these developments there have already been other factors which combined to shake the investors and operators on the global equity markets. For instance there is already a political fray between the American House of Representatives and President Donald Trump regarding payment for building of a wall on the Mexican border to keep the Mexicans from crossing the border into America. This has led to a partial shut down of the American government.
Some critics of President Donald Trump say that several of his actions and the mode and manner in which he is running the White House has given rise to confusion and disorder which have bred a string of uncertainties leading to chaos.
No doubt China has been facing economic and banking problems since early this year in addition to a reported property bubble, besides growth problems in its economy, but the initiation of Tariff Tensions between China and America appear to have additionally distracted the investors on the equity markets. Thus the Dow Jones as well the Shanghai Composite has already been discounted by the investors.
Brutal blows have thus been inflicted not only on the Dow Jones, Shanghai Composite, or for the matter Japan's Nikkei, but the whole global economic edifice has been shaken up by the large fall in equity values.