Weekly Cotton Review: Cotton rates stable as market witnesses bearish trend

KARACHI: Cotton production in the country registered a satisfactory increase of 159.2 percent which is around 16.50 Lac bales. It is expected that 95 Lac bales will be produced in the country. Import agreements of around 30 Lac bales have been signed. Bearish trend prevails in the market due to difficulties in shipment. There is an increase in the exports of textile products.

In the local cotton market during the last week the rate of cotton remained stable. Textile mills were involved in cautious buying. Most of the ginners sold over their cotton as the market dipped. There was no panic among ginners due to lack of delivery as a result of which bearish trend prevails in the market during the week.

However, according to the information received from the cotton yarn market bearish trend continues in the rate of cotton yarn and PC cotton. Many mills had sold cotton yarn on high rates in large quantity. They were involved in cautious buying due to which the rate of cotton yarn has not decreased. It is possible that during the coming week the rate of cotton yarn may be dipped.

One reason behind the stability in the rate of cotton in the local cotton market is historical increase in the rate of dollar due to which the import of cotton has decreased. However, according to the importers of cotton import agreements of 30 Lac bales have been signed while local textile and spinning mills have to sign agreements for the import of 65 Lac bales. The demand of local industry is around one Crore 65 Lac bales while according to the official estimates 85 Lac bales will be produced in the country.

Although, according to the analysts if the weather conditions remain favourable and there will be moderate rains besides crops are sprayed properly, it is expected that 95 Lac bales will be produced in the country.

According to the report of Pakistan Cotton Ginners Association till September 15 there is a satisfactory increase of 16 50 Lac bales

The rate of cotton in Sindh as per quality is in between Rs 12200 to Rs 13400 per maund. The rate of Phutti is in between Rs 4500 to Rs 5800 per 40 kg. The rate of Banola is in between Rs 1650 to Rs 1800 per maund.

The rate of cotton in Punjab is in between Rs 13200 to Rs 13500 per maund. The rate of Phutti is in between Rs 5000 to Rs 5800 per 40 kg. The rate of Banola is in between Rs 1650 to Rs 1800 per maund.

The rate of cotton in Balochistan is in between Rs 13100 to Rs 13200 per maund. The rate of Phutti is in between Rs 6000 to Rs 6900 per 40 kg. The rate of Banola is in between Rs 1700 to Rs 1850 per maund. After the satisfactory production report of Pakistan Cotton Ginners Association the rate of cotton has dipped by Rs200 to Rs300 per maund.

The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs150 per maund and closed it at Rs13250 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that mixed trend was witnessed in international cotton market. The rate of New York cotton is decreased by two American cents. The reason behind it is increase in the rate of dollar. The news of hurricane in cotton-growing areas also had a negative impact.

According to the weekly export report of USDA, exports decreased by 37 per cent while shipment increased by 53 per cent. Interestingly, China is number 1 and Pakistan is number 2.

Mixed trend was seen in the rate of cotton in China, Brazil, Central Asia, Africa and Argentina. Bearish trend prevails in Indian cotton market due to arrival of new crop. It is expected that cotton crop will be affected in India due to rains in Gujarat. Although, Cotton Cooperation of India is active to buy cotton on MSP price in order to save market from fluctuation.

This year support price of Phutti in Pakistan is fixed at Rs 5000 but due to rains the rate of Phutti in some areas reached at the lowest level of Rs 4500 to Rs 5000 per 40 kg but the rate of high quality Phutti is in between Rs 5600 to Rs 5800.

Seed cotton (Phutti) equivalent to over 2.6 million or exactly 26,86,537 bales have reached ginning factories across the country till September 15, registering increase of 159.52 per cent as compared to corresponding period of last year.

According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA) released on Saturday, over 2.4 million or 2,414,000 bales have undergone the ginning process i.e., converted into bales. Cotton arrivals in Punjab were recorded at over 0.95 million or 9,59,925 bales registering a surplus of 186.66 pc as compared to corresponding period of last year when arrivals were recorded 3,34,863 bales.

Sindh generated over 1.7 million or 17,26,612 bales, registering an increase of 146.54 pc as compared to corresponding period of last year when arrivals were recorded 7,00,331 bales.

Textile mills bought 23,50,505 bales while exporters purchased one thousand bales and Trading Corporation of Pakistan (TCP) didn't buy during the cotton season 2020-21.

Sanghar district of Sindh topped with cotton arrival figure of 10,01,860 bales followed by Bahawalnagar district of Punjab with 2,32,550 bales.

Total 472 ginning factories were operational in the country including 255 in Punjab. As much as 3,35,032 bales cotton stock was available in the ginning factories.

Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that this year arrival of Phutti started a little bit earlier as compared to last year. He said that on September 15, 2018 the cotton production was over 25 Lac bales. On September 15, 2017 cotton production was over 23 Lac bales. During these years the production of cotton was accordingly one Crore 16 Lac bales in 2017 cotton production was one Crore seven Lac bales. However, this year according to the estimates of experts that due to the report of attack of Milli Bug and White fly on cotton crop around 95 Lac bales will be produced.

The country's textile group exports witnessed 28.67 percent growth during the first two months (July-August) of current fiscal year that remained $ 2.933 billion compared to $2.280 billion during the same period of last fiscal year, says the Pakistan Bureau of Statistics (PBS).

The exports and imports data released by the PBS revealed that textile group exports on month-on-month basis witnessed 0.57 percent decline and remained $ 1.462 billion in August 2021 compared to $ 1.471 billion in July 2021.

Textile group exports have witnessed a growth of 45.19 percent on year-on-year basis and remained $ 1.462 billion in August 2021 compared to $ 1.007 billion in August 2020.

Cotton yarn exports registered a growth of 67.97 percent during July-August 2021 and remained at $ 193.389 million compared to $ 115.136 million during the same period of last year and increased by 89.55 percent in August 2021 and remained $ 103.518 million when compared to $ 54.612 million during the same month of last year. Raw cotton exports witnessed 100 percent decline on month-on-month basis as well as on year-on-year basis.

Copyright Business Recorder, 2021