LAHORE: The local cotton market on Tuesday remained dull while the trading volume remained low.
Cotton Analyst Naseem Usman told that the rate of cotton in Punjab and Sindh is in between Rs 18000 to Rs 21,000 per maund.
He told that due to political unrest in the country local trading of cotton could not restored while bullish trend prevails in the international cotton market. He also told that sowing of cotton has started in Lower Sindh as the farmers started getting water for the crops.
Pakistan’s economy enjoyed a strong recovery and grew 5.6 percent in FY21 following measures taken by the Government to mitigate the adverse socio-economic impacts of the COVID-19 pandemic.
According to the World Bank’s Pakistan Development Update, released today, while economic activity maintained its momentum during July-December 2021, high demand pressures and rising global commodity prices led to double-digit inflation and a sharp rise in the import bill during this period. These developments have had an adverse impact on the rupee. Moreover, long-standing structural weaknesses of the economy including low investment, low exports, and low productivity growth pose risks to a sustained recovery.
The report highlights that with economic recovery and improved labour market conditions, poverty—measured at the lower-middle-income class poverty line of $3.20 Purchasing Power Parity 2011 per day—declined from 37 percent in FY20 to 34 percent in FY21. However, rising food and energy prices are expected to decrease the real purchasing power of households, disproportionally affecting poor and vulnerable households that spend a larger share of their budget on these items.
“Pakistan’s economic recovery after the COVID-19 crisis indicates that the country has enormous potential to overcome challenging economic situations,” said Najy Benhassine World Bank Country Director for Pakistan. “However, sustaining the economic recovery requires addressing long-standing structural weaknesses of the economy and boosting private sector investment, exports and productivity.”
On the back of high base effects and recent monetary tightening, real GDP growth is expected to moderate to 4.3 and 4.0 percent in FY22 and FY23, respectively. Thereafter, economic growth is projected to slightly recover to 4.2 percent in FY24, provided that structural reforms to support fiscal sustainability and macroeconomic stability are implemented rapidly, and that global inflationary pressures dissipate.
However, the macroeconomic risks remain very high. These include tighter global financing conditions, potential further increases in world energy prices, and the possible risk of a return of stringent COVID-19-related mobility restrictions. Domestically, political uncertainty and policy reform slippages can also lead to protracted macroeconomic imbalances.
“To mitigate immediate macroeconomic risks, the Government should focus on containing the fiscal deficit at a level which ensures debt sustainability, closely coordinate fiscal and monetary policy, and retains exchange rate flexibility,” said Zehra Aslam, the lead author of the report.
Meanwhile, the sudden surge in policy rates to 12.25 per cent by the State Bank of Pakistan may cause a decline in its Pakistan’s value-added textile sector, says Shahzad Azam Khan, Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association (PHMEA). It would also have disastrous effects on the economy, industry and exports, he adds. The enhancement in Export Finance Schemes rates to 5.5 per cent will impact exporters’ efficiency and increase liquidity pressures, he adds.
Already troubled by liquidity crisis and other financial challenges, the domestic industry will be devastated by the sudden increase in policy rates, feels Khan. He has urged Prime Minister Shahbaz Sharif and his economic and financial team to take heed to the demands of the business community and reverse the policy discount and EFS rates. Khan has also urged the new government to stick to the “Charter of Economy” for the country’s future development.
Moreover, ICE cotton futures rose more than 1% on Monday, taking cues from upbeat sentiment across wider grains markets.
Cotton contracts for July were up 1.68 cent, or 1.2%, at 142.40 cents per lb by 11:42 a.m ET. The May cotton contract on ICE futures rose 1.78 cents, or 1.3%, to 143.76 cents.
“Cotton market is following the grain markets and they’re all sharply higher. This is mostly due to the logistics problem in China,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
“There are hundreds of ships waiting to off-load and reload in China and this is supporting the prices for agricultural markets in the US.”
China, one of the top consumers of U.S. cotton, reported 23,460 new coronavirus cases on April 17 vs 26,155 a day earlier....
US grains futures rose, with corn hitting its highest in nearly a decade, supported by tightening global supplies and a production outlook clouded by the Russia-Ukraine war and unfavourable U.S. weather conditions.GRA/
Oil prices rose in choppy trade, as outages in Libya deepened concern over tight global supply and the Ukraine crisis dragged on. Higher oil prices make polyester, a substitute for cotton, more expensive.O/R
The Spot Rate remained unchanged at Rs 20,500 per maund. Polyester Fiber was available at Rs 290 per kg.
Copyright Business Recorder, 2022