KARACHI: Continued sluggish performance by the local cotton market resulted in lowering of the ‘Spot Rate’ by Rs 200 on Friday as it dropped from Rs 11,000 per maund to Rs 10, 800.
The market is bearish for last many days; very thin in volume or trade, which has led to drop-in spot rate. It is said that some 3,000 bales were negotiated in Rahim Yar Khan today that too on very lower rates which pushed the spot rate down, said Naseem Usman Chairman Karachi Cotton Brokers Forum.
Meanwhile, ICE cotton futures gained over 3% on Thursday on an increase in weekly export sales, while traders turned their attention to a monthly US government supply and demand report due on Friday.
Cotton contracts for May rose 1.99 cent, or 2.5%, to 81.49 cents per lb by 12:45 p.m. EDT (1645 GMT), having risen as much as 3.1% earlier in the session. It traded within a range of 79.6 and 81.94 cents a lb.
The US Department of Agriculture’s (USDA) weekly export sales report showed net sales of 269,900 Running Bales (RB) for the 2020/2021 marketing year, noticeably above the previous week and 8% higher than the prior four-week average.
The report included exports of 371,700 RB, up 15% from the previous week. “If you see more exports (going forward), which I think you will, it’s possible to have a carryover (figure) down around 3 million bales (in the current marketing year)- it’s going to tighten up the crop,” Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.
Cotton was also supported by hopes for a reduction to US ending stocks in the USDA’s World Supply and Demand Estimates (WASDE) report due at 12 p.m. EDT (1600 GMT) on Friday, Love added.
Further supporting cotton, the dollar eased 0.5%, making the commodity cheaper for buyers holding other currencies. The natural fibre also tracked gains in wider markets with the S&P 500 scaling a record peak and corn, soybeans and wheat also rising.
“If you’re going to have $6 corn and $14-15 soybeans, that has an impact on cotton- because the same farmers can plant other crops,” Love said. Total futures market volume fell by 6,486 to 33,969 lots. Data showed total open interest gained 1,207 to 230,799 contracts in the previous session.
Meanwhile at domestic front, Pakistan Central Cotton Committee (PCCC) Vice President Dr. Muhammad Ali Talpur in a statement has said that CPEC would open new roads for research and development for cotton while the Federal Ministry of Food Security & Research help PCCC to develop itself on latest scientific lines.
He further said that a Centre of Excellence is being setup at the Multan Central Cotton Research Institute under the China-Pakistan Economic Corridor project to promote research activities, cotton breeding programme and use of latest bio technology. Under the same programme, China will also help extending latest technology regarding developing such a seed of cotton which can tackle the issues of leaf curl virus, pink bollworm, white fly of cotton and other issues being faced by cotton growers.
Talpur claimed that steps are being taken at Government-to-Government level in this regard which will not only help resolving the issues faced by cotton but also bring down its cost of production significantly and make cotton crop profitable.
He was hopeful that all the issues faced by cotton will be resolved in next two to three years because of efforts being taken by the Federal Ministry of Food Security & Research including intervention price for cotton growers and subsidy to its growers on fertilizers, pesticides etc.
Meanwhile FPCCI Standing Committee on Cotton and Textile in a meeting vowed to take steps for enhancing cotton yield and its convener Talat Sohail said that recommendations in this regard by the committee would soon be finalized and sent to the federation high-ups for implementation. President of Pakistan Kisan Ittehad Chaudhry Muhammad Anwar and others termed the high input cost as a factor behind the decline. Committee members Seth Prem Chand, Abdul Sattar Memon and Seth Sonu Mal Sakeja also blamed the PCGA for this.
Meanwhile, according to a media report suggest that recent decision of the Economic Coordination Committee (ECC) to allow import of cotton and sugar from India had been taken by bypassing the Ministry of Foreign Affairs.
The media report claimed that Planning Minister Asad Umar and Adviser to Prime Minister on Institutional Reforms and Austerity Dr Ishrat Husain backed the move as far as economic benefits were concerned. However, they termed it a political decision and suggested seeking opinion of the foreign ministry on the matter.
However, ECC Chairman and newly appointed Finance Minister Hammad Azhar took the decision by ignoring their concerns. The Ministry of National Food Security and Research secretary opposed the plan to import cotton from India mainly because in India cotton was being produced with much subsidized input prices and growers were assured of a minimum support price.
Naseem Usman said some media reports suggest that yarn prices have increased 7 to 10 per cent after refusal of import. Cotton’s rate in Sindh was in between Rs 10,200 to Rs 10400 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg. The rate of cotton in Punjab is Rs 10,500 is 11, 000 per maund. The rate of Phutti in Punjab is in between RS 4,800 to Rs 6,000 per 40 kg.
Similarly, the rate of Banola in Sindh was in between Rs 1,600 to Rs 2,000 while the price of Banola in Punjab was in between Rs 1,800 to Rs 2,250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6,300 to Rs 6,400 per 40 Kg. Again, Spot Rate declined to Rs 10,800 per maund and Polyester Fiber was available at RS 215 per Kg, Naseem Usman highlighted.
Copyright Business Recorder, 2021
Comments
Comments are closed.