Cotton market remains unwavering

KARACHI: The local cotton market on Saturday remained stable and volume remained satisfactory.

Cotton Analyst Naseem Usman told that the rate of cotton in Sindh is in between Rs 12900 to Rs 13000 per maund. The rate of cotton in Punjab is in between Rs 13500 to Rs 13600 per maund. The rate of new crop of Phutti in Sindh was in between Rs 5800 to Rs 6000 per 40 Kg. The rate of Phutti in Punjab is in between Rs 5800 to Rs 6300 per 40 Kg. The rate of Banola in Sindh is in between Rs 2000 to Rs 2100 per maund. The rate of Banola in Punjab is in between Rs 2000 to Rs 2200 per maund.

For the first time in the history of Pakistan, exporters have been levied with 300% higher tax as compared to local businesses. The federal government in its budget has facilitated the local SMEs and neglected, as usual, the SMEs of export sectors. The value added textile sector had in its budget proposals demanded of the federal government to reduce income tax as well as sales tax rates for exporters but in vain. Globally, there are no taxes on export businesses, and where taxes are levied on exports the rate is lower than the one levied on local businesses. However, in Pakistan the situation is the opposite.

The value added textile sector is very disappointed that the government has not accorded consideration to its demands. This joint statement was made by Jawed Bilwani, chairman, Pakistan Apparel Forum, Riaz Ahmed, central chairman, Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, chairman, Pakistan Knitwear and Sweater Exporters Association; Feroze Alam Lari, chairman, Towel Manufacturers Association of Pakistan; Abdus Samad, chairman, Pakistan Cloth Merchants Association, Khawaja M. Usman, former chairman, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, Shaikh Shafiq, former chairman, Pakistan Readymade Garment Manufacturers & Exporter Association, Zulfiqar Ch., chairman, All Pakistan Textile Processing Mills Association, Khawaja Muhammad Younus, chairman, All Pakistan Bed-sheets & Upholstery Manufacturers Association, Shoaib Majeed, chairman, Pakistan Denim Manufacturers & Exporters Association, Naveed Elahi, chairman, Pakistan Bedwear Exporters Association, and Yusuf Yaqoob, chairman, Pakistan Weaving Manufacturers Association.

The textile exporters demanded restoration of Zero Rating of GST - No Payment No Refund System. Imposition of 17% GST has made the textile exporters specially SMEs financially unviable as their precious liquidity, without any purpose, stuck up and they throughout the year face financial difficulties to fulfill their export commitments.

It is on record that 33% SME exporters have closed their export business since imposition of 17% GST which blocked exporters’ precious liquidity. With the continuation of 17% GST in 2021-22, many more SME textile exporters who managed to survive last year shall fear closure as well in the wake of liquidity pressure. 17% GST on exports and refund after months is the key hurdle in the boost in exports. Therefore, for the sake of survival of SMEs textile exporters and employment provided, it is highly crucial to restore no payment no refund GST regime which has been tried and tested or reduce GST rate to 5%.

Meanwhile, Mir Muhammad Ali Khan a renowned investment banker in his tweet said that Services and Goods Exports cross $31 billion dollar mark for the first time In Pakistan’s history for the fiscal year ending on June 30th 2021.

In Bangladesh’s Mymensingh division there are bright prospects of growing more cotton, with 2,000 hectares of land targeted to be cultivated this season which was 1,800 hectares last year, said officials of Cotton Development Board (CDB) in Mymensingh. Now some 3,500 farmers are involved in cotton production in Mymensingh, Tangail, Jamalpur and Sherpur under the division.

Cotton is grown in hilly regions of Mymensingh and char areas, said CDB Executive Director Alhaz Uddin Ahmed. “There is also prospect of cotton cultivation through intercropping,” he said.

Dr Shefali Rani Mozumder, chief cotton development officer of the CDB’s Mymensingh zonal office, termed cotton an important cash crop benefiting farmers with good prices. A farmer can produce 110 maunds to 112 maunds (one maund equals around 37 kilogram’s) of cotton per hectare of land cultivating some six hybrid varieties. Every maund is now sold for Tk 2,700.

The plant can be turned into fuel and fodder while edible oil is produced from its seeds, said the official.

Bangladesh meets 99 per cent of its requirement for the raw material for textiles and garments industry through imports as its domestic production is very low. Traders, importers and millers import 80 lakh bales of cotton, spending $3 billion a year. Locally, cotton acreage and production is increasing gradually to meet a part of the domestic requirement. Production of cotton fiber declined marginally year-on-year to 1.76 lakh bales in fiscal 2020-21 from 1.78 lakh tonnes, shows the CDB data.

ICE cotton futures rose more than 1% on Friday buoyed by a weaker dollar and tracking an uptick in grains, but were still headed for a weekly dip after the USDA’s acreage projections drove a sharp slide earlier this week.

Cotton contracts for December rose 1.03 cent, or 1.2%, to 86.93 cents per lb, at 13:09 p.m. EDT (1709 GMT). The combination of a weaker dollar and gains in grains are helping prices, said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.

“People are just standing aside until after the holiday, and then they’ll come send up a periscope on Monday or Tuesday and see what the weather is doing and what the world is up to at that point,” Love added.

The contract is set to edge down about 0.3% this week, driven mostly by Wednesday’s 3% drop after the USDA’s June acreage report projection of 11.7 million acres for all cotton in 2021 disappointed market expectations of a lower number.

“The higher-than-expected acreage number has put a lid on a market that didn’t have much upside momentum to begin with,” Peter Egli, director of risk management at British merchant Plexus Cotton said in a note on Thursday.

Global cotton production is projected to recover in 2021/22, after recording the lowest levels in the last 4 seasons in 2020/21, the International Cotton Advisory Committee (ICAC) said on Thursday. Consumption gained 12.5% in 2020/21 and further improvement is projected for next season, recovering after the slowdown in the last year, the ICAC said.

The Spot Rate remained unchanged at Rs 12900 per maund. The Polyester Fiber was available at Rs 210 per Kg.

Copyright Business Recorder, 2021