Dull trade on cotton market

Despite the fact that we have reached the tail-end of our current season (August 2016/July 2017) with only about 250,000 bales (155 Kgs) lying unsold in the open market, cotton rates remain mostly unchanged over the week. As the domestic textile industry continues to remain mostly in losses, lint prices remained mostly unchanged since the beginning of this month.

Even while global cotton prices are reported to be mostly tight as in America and India, they are also said to be quite steady in China. Local lint prices continue to range from Rs 6500 to Rs 7000 per maund (37.32 Kgs), according to the quality. Traders said on Thursday that cotton prices are presently cheaper in Pakistan compared to the global prices.

According to the final seed cotton (Kapas/Phutti) arrivals for the current season (2016/2017), the total upto the 15th of April 2017 were 10,727,182 lint equivalent bales from which the domestic mills picked up 10,259,229 bales. The exporters lifted 202,356 bales. Unsold bales reported to be with the ginners are said to be 265,597 bales.

Sowing for the new crop (August 2017/July 2018) has started slowly. However, hot weather and lack of adequate water are said to be impediments to quicker and larger amount of sowing of the new crop. Thus the sowing of the new cotton crop is being carried on slowly.

One of the leading ginner and cotton merchant Iqbal Umar Wadhawan, Director of the prestigious and well regarded firm Haji Khudabux Amir Umar (Pvt) Ltd. passed away on 18 April 2017. The late Iqbal Umar and his family have been ginners, cotton merchants and exporters for more than seventy years. Iqbal Umar was a very amiable person who was very well informed in cotton trade and was highly regarded. He was also a former Chairman of the Karachi Cotton Association. He belonged to a very distinguished trading family of Chiniot. May Allah Almighty bless his soul and bestow forgiveness upon him. Ameen

On the global economic and financial front, some major political news and developments are keeping the markets on a tightrope. Both equity and commodity markets are showing extra uncertainties, volatilities and a lack of a credible direction due to political developments in several areas around the world.

Since the last many months, the North Korean programme to keep firing missile after missile in the region of the Korean peninsula sounds obviously threatening to Japan, South Korea and China which has also irked America which maintains worldwide presence and also has an abiding interest in the region. This continuing missile throwing activity in the Korean/Japanese region keeps the tensions high all over the world. Business activity suffers and investment also remains vulnerable with equity markets remaining apprehensive of any largely negative outcome.

Other negative developments remain regarding trouble spots in Syria, Iraq and Turkey. The burgeoning and never ending immigration of large number of people from the Middle East to Europe remains a continuing catastrophe. Fears of miscreants, trouble makers and mischief mongers entering Europe is increasingly impinging on economic performance there.

The forthcoming election in France is also seen with some uncertainty regarding the shape a new economic programme could take in case Le Pen wins who carries an appeal in the centre and left of centre politics in France. Investors believe that the election of Marine La Pen is a great risk and thus some equity markets turned topsy-turvy this week around the world. It appears that the American Federal Reserve Bank believes that the economy is attaining momentum. It seems that the Federal Reserve believes that America is prepared for increasing rates steadily but regularly as the economy is in a position to absorb it. A sustained growth in the American economy is seen by the Federal Reserve. Indeed some other central banks around the world see the need to increase interest rates in view of the improvement in the economies in their countries or regions. The Eurozone could thus also keep increasing its interest rates. It is of prime interest to note that Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), recently said that all its 189 members believe in free and impartial global trade to meet and adjust the needs of the membership. She added that members of the IMF are determined to find ways and means to make sure that trade benefits all the members in a level playing field.