KARACHI: Mixed trend was witnessed in local and international cotton markets. Extra ordinary fluctuation was seen in the rate of New York Cotton. Tension increases between All Pakistan Textile Mills Association and Value added sector on the issue of import of yarn and cotton from India. The sowing season is very near but it is very unfortunate that no strategy is evolved by the government. “Now or Never”. The time is passing at a very fast pace.
In the local cotton market during the last week mixed trend was seen. Interest was not seen by textile sector in buying due to high rates although ginners want that rate remained high but the trading volume remained low.
During the last week news regarding preparation of summary for the permission of import of cotton and cotton yarn remained circulating in the market. There is a possibility that permission will be granted to import cotton and cotton yarn from India through Wahga. The business disturbed due to uncertainty among ginners and textile mills regarding import of cotton and cotton yarn from India. Moreover, extraordinary fluctuation was seen in the Rate of New York Cotton during the last two weeks. The rate of New York Cotton increased by 10 cents, that is from 85 cent per pound to 95 cent per pound. The Rate of Promise (Waday Ka Bhao) of New York Cotton for the month of May increased but after decreasing on Friday, it was 85 American cents but again after increasing it was closed at 87 American cents due to which the trading volume remained low.
Although after the coming of the report of the Pakistan Cotton Ginners Association till March 1, the ginners had the stock of almost two lac bales for selling. During the last week tussle going on between the APTMA and the value added sector regarding import of cotton and cotton yarn from India. APTMA was of the view that that there is no need of importing cotton and cotton yarn from India as cotton and yarn are coming through DTRE. While value added sector is of the view that government should allow the import of cotton and yarn from India as there is a shortage of yarn in the country. They were of the view that if the government had not given the permission of Import of yarn then it will be difficult for them to full fill the international commitments and exports will be badly affected.
During the week the rate of cotton in Sindh is in between Rs 10200 to Rs 12300 per maund. The rate of Phutti which is left in limited quantity is in between Rs 4500 to Rs 5300 per 40 kg while the rate of Banola oil and Khal remained stable. The rate of cotton in Punjab after reaching between Rs 10500 to Rs 13000 per maund came back to Rs 12500 per maund. The rate of Phutti which is almost over in Punjab is in between Rs 4500 to Rs 6300 per 40 kg while the rate of Banola oil and Khal remained stable.
Both cotton and Phutti in Balochistan is almost over only Phutti is coming from Dalbadin and brokers are demanding extra rate of Rs 700 to Rs 1000 and were selling it by calling Afghani and Balochi Phutti.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 100 per maund and closed it at Rs 12000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all mixed trend was witnessed in the rate of cotton in international cotton market especially fluctuation of 20 American cent was witnessed in the rate of New York Cotton during the last two weeks which is extraordinary. The rate first reached 95 American cents from 84 American cents but after decreasing closed at 87 American cents. People were of the view that rate may reach at the highest level of one dollar five cents but due to some reason the rate was not increased. The Rate of New York Cotton witnessed a decrease especially due to the increase in the rate of dollar, over purchasing, profit taking and uncertainty. The negative effect of decrease in the rate of New York Cotton was witnessed in international markets especially in the Pakistani market where continuous bullish trend stopped and trading volume also decreased.
On the other hand USDA weekly export report witnessed an increase of twenty nine percent. This week too China was the biggest importer and Pakistan was on number second. The rate decreased a little bit because increase in the rate of dollar. Increase in the export of New York Cotton. In the same way bullish trend stopped in the international cotton markets of Brazil, Argentina and Central Asian states where the rates decreased a little bit. The rate of cotton increased in India but under the influence of New York Cotton the rate comes under pressure.
On the other hand there is an uncertainty among both textile mills and ginners in both India and Pakistan that both the governments of India and Pakistan will give permission of resumption of trade between the two countries or not.
Few days back Advisor to Prime Minister on trade Abdul Razak Dawood in its tweet said value added sector is not getting yarn on competitive rates and they are facing difficulties in full filling the export orders. In this context he gave a proposal of allowing import of cotton from India through Wahga border. The news were also circulating in the market that summary has been prepared in this regard.
Due to the border tension between India and Pakistan trade was suspended for the last two years that’s why according to most people it looks difficult that government may allow value added sector to import cotton from India.
In this regard when Naseem Usman contacted chairman Cotton Association of India Atul Ganatra he said that it is difficult that both sides reached to some agreement. He also said that besides duty issue there is a tension between two countries so chances are very low.
Naseem Usman also contacted former President of Cotton Association of India Dheeran Seth in Mumbai he also said that it looks very difficult. He said that trade ties were suspended between the two countries as well as there was tension on the borders. He further said it depends on both the governments that weather they gave the permission or not.
Naseem also contacted experienced analyst in Ahmedabad Ajay Kumar who supplied cotton all over India who said that they will well come resumption of trade ties between the two countries. He also said cotton should be exported from India to Pakistan.
Cotton Broker of Indian Gujarat Muhammad Amir said that it is in the interest of both countries that trade ties should be resume. Pakistan should import cotton from India.
APTMA and value added sector have locked horns on the issue of import of cotton. APTMA was of the view that we have sufficient cotton yarn and there is no need of importing yarn especially from India and government should not allow import of yarn from India. On the other hand it was also witnessed that yarn is being imported from other countries to Pakistan. Mills having DTRE facility importing yarn free of duty but the fact is that yarn is not available for fine count and import of fine count is going on.
On the other hand value added sector is pressurize government that they should allow them to import yarn from India through Wahga because they were facing difficulties in full filling the export orders. Up till now government has failed to solve the issue.
Chairman APTMA Asif Inam in a statement issued here on Friday stressed the government that import of yarn from India should not be allowed because local textile and spinning industry will effected if import of yarn will be allowed from India.
While value added sector is continuously insisting that government should allow import of yarn from India, otherwise exports will suffer.
The cotton production in the country witnessed an alarming decline of 34.18 percent as compared to corresponding period of 2020 when arrivals comprised over 8.5 million bales.
According to the statistics released by Pakistan Cotton Ginners Association till March 1, on Wednesday exactly 5,631,191 bales underwent the ginning process i.e. conversion to bales. Cotton arrivals in Punjab were recorded at over 3.5 million or 3,501,580 bales, while Sindh generated just over 2.1 million or 2,136,169 bales.
Cotton arrivals in Punjab were recorded at over 3.5 million or 3,501,580 bales which is 1.5 million bales less as compared to the last year’s production of more than 5 million bales.
Cotton arrivals in Sindh were recorded 2.1 million or 2,136,169 bales which is 38.52 percent less as compared to the last year’s production of more than 3.4 million bales.
Just over 5.4 million or 5,446,141 bales were sold out with major chunk of it, 5.37 million (5,375,941) bales, bought by textile mills and 70,200 by exporters. Exactly 191.608 bales were lying unsold at the ginneries. Bahawalnagar district of Punjab remained on top with cotton arrival figure of 998,131 bales followed by Sanghar district in Sindh (791,278) and Rahim Yar Khan (656,885 bales).
A total of 22 ginning factories were operating in the country - all of them in Punjab, and none in Sindh.
Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that due to the alarming decline in the cotton production seven million bales of worth four billion dollars will be imported. He said up till now agreements for the imports of 4.5 million bales had been signed. There is a pressure on the economy. He said that cotton production is lowest in 30 years.
According experts government should take practical steps for increasing the production of cotton in the country. They said it looked that government was not serious in increasing the production of the country. They also said after 18th amendment agriculture was a provincial subject but unfortunately it looked that both the provincial governments of Sindh and Punjab was not serious in increasing the production as they had not taken any positive steps in this regard.
Chief minister Punjab Sardar Usman Buzdar and Chief Minister Sindh Syed Murad Ali Shah looks not serious in increasing the production of cotton while agriculture minster of Sindh Zafar Khan Jamali and agriculture minster Punjab Hussain Jahanian Gardezi had also done nothing for increasing the production of cotton.
On the other hand federal government is focusing on sugar cane by giving them subsidies to the farmers. Prime Minister Imran Khan had constituted Cotton Task Force under the chair of Gohar Ejaz but no statement came from him in such a difficult situation.
Experts were of the view that textile sector should tell should think seriously and evolve a strategy to increase the production of cotton in the country. Rates of cotton are increasing in the international cotton markets and it looks difficult that it will come down and if the situation remained like this then it is difficult that 200 tons will be imported.
Time for discussions has passed it is the time that all the stake holders including Pakistan Cotton Ginners Association, representatives of the government and cotton experts like Major Kashif, Mubasher, Ahsan Ul Haq, Mudassir Shah and Naseem Usman should sit together and beloved a strategy for increasing the production of cotton in the country.
Copyright Business Recorder, 2021
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