Market rates prevail amidst slight improvements in crop with respect to quality expectation

Steady tone seen on cotton market

Arrivals of current crop cotton (August 2016 / July 2017) are increasing steadily. Reports indicate that the quality of both seed cotton (Kapas/Phutti) and lint cotton has also improved. There is also talk of marginally higher yields per hectare for current crop cottons. Upto now the output of the current crop has been estimated to be about 12 million bales (155 Kgs). Till now arrivals of new crop cotton are estimated to be around 700,000 bales (155 Kgs).

On Thursday, the seed cotton (Kapas/Phutti) prices in Sindh are said to have ranged between Rs 3200 to Rs 3400 per 40 Kgs, according to the quality. In the Punjab, seed cotton prices reportedly ranged from Rs 3000 to Rs 3400 per 40 Kilogrammes. Lint prices in Sindh are said to have ranged from Rs 6600 to Rs 6700 per maund (37.32 Kgs) according to the quality. In Punjab, cotton prices reportedly ranged from Rs 6800 to Rs 6850 per maund in a steady and stable market.

Mills buying should increase steadily as about only three weeks are left before the approach of the Eidul Azha holidays close to the middle of next month. After earlier easiness on the international market, some improvement was perceptible at midweek. Till now, several showers in the cotton belt have been beneficial to the crop and no substantial damage has been reported. The larger textile mills in Punjab are reported to be regular buyers on the cotton market.

In ready sales of raw cotton, 4000 bales from Sindh reportedly sold in the range of Rs 6600 to Rs 6700 per maund (37.32 Kgs), according to the quality. In the Punjab, 200 bales of cotton from Mongi Bangla and 400 bales from Khanewal both sold at Rs 6750 per maund in a steady and stable market.

On the global economic and financial front, a key variable concerning the world economy relates to the rates of interest fixed by the United States Federal Reserve which determines the rates of lending and borrowing by the commercial banks. At the beginning of this calendar year viz 2016, the Federal Reserve kept giving several indications that due to the perceived improvement in the American economy, the rates of interest would be increased during the current year, possibly two or three times. That has not happened, except once.

The Federal Reserve keeps dilly-dallying and has mostly deferred any sizeably increase in interest rates till now. While the general talk this year has been a sounder American economy, there are lurking fears that any quick rise in interest rates could slow down the American economy.

Likewise, the economic effect of Brexit for the foreseeable future on the United Kingdom or Continental Europe remains undetermined. According to one reckoning, the working features of Brexit may not take effect before 2019. In the meantime, weakness in the Chinese economy, lacklustre performance of the emerging economies, and recent fall in the price of commodities and continuing slowdown in the Japanese economy indicate that the global economy is essentially unwell.

Data on the American economy still portrays a mixed picture. Increase in inflation in America has been determined to be only 0.2 percent in July, 2016, which is said to be the slowest since March, 2016 if food and energy prices are excluded. The Federal Reserve is reported to have set a target of two percent inflation over the coming several years.

Cable News Network (CNN) has reported this week that several central banks around the world have started unloading America’s debt. Since the beginning of this year, foreign central banks are said to have sold a net 192 billion dollars of US Treasury bonds. Those countries dumping the US debt include China, Japan, France, Brazil and Colombia. The sell off is deemed to reflect a weakness in several sections of the global economy as several countries selling their holding of US Treasuries are doing so to prop up the losing values of their currencies.

In a recent broadcast, the BBC said that Japan’s economy has run out of steam. It stated that “Japan’s economy grew at a weaker than expected rate in the second quarter despite an aggressive spending policy by the government”. It may be noted that the government of Japan has launched a massive new stimulus package of Pounds Sterling’s 200 billion. Thus it is seen that all the stimuli and sundry incentives provided by the various central bank’s or other prop provided by the governments of different countries have hitherto failed to prop up the global economy.

Copyright Business Recorder, 2016
 

Source button

0 Comments

Leave a reply

Your email address will not be published. Required fields are marked *

*

CONTACT US

We're not around right now. But you can send us an email and we'll get back to you, asap.

Sending

2nd Floor, Suite#1, Leeds Centre, Main Boulevard Road, Lahore, Pakistan

or

Log in with your credentials

Forgot your details?