Cotton prices sharply decline

After maintaining an upward drive since the beginning of this month, cotton prices declined sharply during this week. Traders said in Karachi that the spinners had built up reasonable reserves of cotton, both from the domestic and foreign suppliers, so that they may not need urgent supplies at higher rates. There is also fear that much, if not most of the remaining supply during the remainder of the season, could be of lower grades.
Thus since the beginning of this week, the domestic cotton prices have undergone a correction as mills are no more in panic to buy local cotton at higher prices. Thus seed cotton (Kapas/Phutti) prices are reported to have conceded about Rs 100 per 40 Kgs, while the lint prices have reportedly declined anywhere from Rs 300 to Rs 350 per maund (37.32 Kgs).
Traders described the ready cotton as being weak, while yarn prices are also said to have suffered a decline. Thus on Thursday, seed cotton prices in Sindh are said to have raged from Rs 2700 to Rs 3050 per40 Kgs according to the quality. In the Punjab, the seed cotton prices are said to have ranged from Rs 2800 to Rs 3300 per 40 kilogrammes in a weak market.
Lint prices in Sindh are said to have ranged lower frommRs 6000 to Rs 6650 per maund (37.32Kgs), while in the Punjab they reportedly ranged from Rs 6250 to Rs 6700 per maund (37.32 Kgs), according to the quality.
Earlier during the recent past, cotton business had slowed down due to smog prevailing in the fields over a wide area of planted cotton which reduced the picking operations, transport of seed cotton to the ginning factories and also the pressing of lint cotton.
Traders said on Thursday that their idea of cotton output during the current season (August 2017/July 2018) was around 11.5 to 12 million domestic size bales (155 Kgs). In the meantime, though the yarn prices have also somewhat moderated, but they have recouped from the earlier very low levels which should assist the textile industry to perform better.
However, the textile mills claim the government has not fully implemented the proposals which it had agreed to. Moreover, the domestic textile industry is still lagging behind its competitors who are enjoying many relieves and benefits from their respective governments.
It appears imperative upon the government to assist the cotton trade and industry so that the entire cotton trade from the growers and ginners to the spinners and weavers play their respective roles fully and assist the largest employers and exporters in the country to improve their activity for the larger interest of the country.
On the global economic and financial front, equity values which were depressed on many stock markets for the past several days, showed general improvement on Thursday. Thus the global markets took an upward trajectory on most bourses at the opening on Thursday. Even some commodity prices were reported to have taken an upward turn, like oil.
Earlier in the week, the British equity index FTSE had suffered a six-week low decline due to weaker financial shares in addition to a decline in the value of British Pound. Actually, British politics is quite unsettled as the British prime minister is said to be facing a rebellion by the Conservative members of Parliament which has weakened the leadership of Theresa May. Furthermore, the Brexit negotiations with the European Union are quite directionless. The dragging Brexit negations are not only hurting Britain but are also slowing down the growth in the European Union to some extent.
AFP has reported from London that the jobless rate in the United Kingdom remains at a forty-two years low level and is far below the inflation rate which has reduced the purchasing power of the workers. Thus the pay squeeze continues to hurt the worker.
In the meantime, the International Monetary Fund (IMF) stated earlier this week that though the growth rate is more sustained in Europe, the Brexit imbroglio is disrupting the negotiations between Britain and the European Union. Barring the disruption in the "divorce" talks between Britain and the European Union, IMF feels reasonably assured about the economic recovery in Europe. However, the European Central Bank vice-president Vitor Constan warned on last Monday that "these developments should not lead to complacency. Vulnerabilities and challenges remain in many euro area economies".
Last Wednesday, China's main indices suffered sizeable losses due to slowdown in industrial production as the country's economic growth has entered a period of moderation. Commodity prices are also said to have tumbled in Shanghai. Moreover, a slew of economic data released on last Tuesday indicated that China's economy has cooled further last month "with industrial output, fixed asset investment and retail sales missing expectations as the government extended a crackdown on debt risks and pollution."
In a report from London on Wednesday, Reuters news agency informed that "World stocks were set for their longest losing streak in eight months while oil prices slipped for a fourth day, though there was some reprieve for the dollar after U.S. data surprised on the upside". Fall in oil prices, cotton, cocoa, palm oil and base metals, partly due to the economic slowdown in China, was registered at midweek. Political turbulence witnessed recently in Saudi Arabia, Venezuela and Zimbabwe has added to the global economic mayhem which has shaken the business community everywhere.