Domestic market cotton prices continue to maintain their steady posture as the Karachi Cotton Association (KCA) fixed its ex-gin price of cotton again at Rs 7400 per maund on Thursday. Though only about 80,000 bales of cotton from the current crop remain unsold with the ginners, their prices have not increased because most of it is likely to be of lower grades.
Even though the New York cotton futures prices shot up to surpass 96 cents per pound earlier this week, our local prices from the current crop are inert most of the time. Buying interest for the leftover cotton from the prevailing season is mostly occasional
Generally speaking, ready lint prices range widely from Rs 6000 to Rs 7500 per maund (37.32 Kgs) in both Sindh and Punjab, according to the quality. Most of the domestic mills having booked imported cottons earlier in the season envisaging a shorter crop this season (2017/2018), there is no apparent rush to buy cotton.
Grower's and the overall cotton trade remains apprehensive that the new crop (August 2018/July 2019) planting has been delayed by about three weeks or so, therefore the arrivals of the new crop may be delayed. Lack of appropriate quantity of rains and irrigation water continues to delay the sowing of the new crop (2018/2019).
It is good to note, however, that the domestic textile sector is doing better and that yarn and textile markets are reported to be steady. There are some reports regarding further possibility of devaluation of the Pakistan rupee up to 125 to the American dollar which could push up exports from Pakistan.
After another fortnight or so, Eid-ul-Fitr holidays would start around the middle of June 2018, which should slow down business, transport and port activities for about a week or so.
General elections are scheduled to be held in Pakistan on the 25th of July 2018 to elect members of the National Assembly when business activity would be closed.
On the global economic and financial front, several issues around the world are casting doubts that the global economy has stabilised. Some of these issues include President Donald Trump's flip-flop attitude while dealing with China, North Korea and other countries. Another recent issue dogging the global economy concerns fears following a new election in Italy the result of which could put its euro membership in jeopardy.
It is said that a deepening political crisis in Italy instigated a selloff of Italian assets last Tuesday not dissimilar to the Eurozone debt crisis of 2010-2012. According to Reuters reporting from London early this week, the fear in the markets related to the appointment of former International Monetary Fund (IMF) official as an interim prime minister. As a result, the news went viral with people in the European Union and elsewhere around the world started speculating whether Italy, the third largest economy in the Eurozone, would remain in the Zone.
This development resulted in the fall in FTSE to its lowest level in three weeks in the last Tuesday's session. Similarly, the perceived political risk in Italy precipitated the fall in European shares as reported from Milan and London.
Wall Street was no different. Large fluctuations also bruised the stocks values so that it is reported that last Tuesday both the Dow Jones Industrial Average as well as Standards and Poor suffered their biggest one day fall in a month. Similarly, stocks in Shanghai, India, Hong Kong and elsewhere hit low level not seen over the past many days or even weeks.
As mentioned earlier, China is reported to have strongly criticized America for its "sudden flip-flop in its trade policies which are conciliatory at one time and which turn threatening soon thereafter. Chinese authorities have lambasted these sudden changes and reverses in trade and other sensitive issues by President Donald Trump.
Though now equity values have recovered reportedly, there are still fears that Italy's market crash could trigger a global economic collapse. Several financial analysts believe that a buildup of an estimated Dollar 233 trillions of global debt bodes a possible economic collapse around the world in the foreseeable future.
According to Jim Rogers, an American businessman and commentator, the worst financial crash in our lifetime is forthcoming. Similarly, American business and investor George Sores is fearful that major financial crisis could be lurking around the corner. Thus the fears of a global financial calamity appear to be a reality.