LAHORE: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Monday increased the spot rate by Rs 500 per maund and closed it at Rs 17300 per maund. The market remained bukkish and the trading volume remained low.
Cotton analyst Naseem Usman while talking to Business Recorder told that price of Phutti of Sindh was traded from Rs 4500-7600 per 40 kilograms; Punjab’s Phutti attracted per 40 kilograms prices from Rs 6000 to Rs 7800. The Prime Quality Cotton was available at Rs 17500 per maund.
Similarly, Phutti from Balochistan was traded at Rs 6500 per 40 kilograms to Rs 8200 per 40 kilograms.
Cotton of Sindh was traded from Rs 13,500 to Rs 17000 per maund, Punjab’s cotton was traded from Rs 14,500 to Rs 17000 per maund and Balochistan’s cotton prices remained from Rs 16,000 per maund to Rs 16,500 per maund.
While Banola from Sindh was traded from Rs 1,400 to Rs 2,300 per maund, Punjab’s crop was traded from Rs 1,800 to Rs 2,400 per maund and Balochistan’s Banola was traded from Rs 1,700 to Rs 2,300 per maund, added Naseem Usman.
As many as 600 bales of Deherki were sold at Rs 17800 per maund and 1000 bales of Feeroza were sold at Rs 18000 per maund.
Cotton imports to Bangladesh may fall in the current marketing year (MY) of June-May despite an increase in consumption of the major raw material of the garment industry, predicted US Department of Agriculture (USDA). In a recent report, they said the spinners may be inclined to use more cotton from their stock instead of import as cotton price is shooting up.
The USDA report was published on 13 December this year. In the report USDA said cotton imports in Bangladesh may fall to 8.2 million bales in the MY22 from 8.75 million in the MY21.
“Due to the high international price of cotton, local spinning mills will consume more out of stocks,” said the report. Referring to the rise in domestic cotton consumption that rose by 23 per cent in MY21, the USDA report also projected that in MY22, cotton consumption may increase to 8.81 million bales.
But local cotton importers disagreed with the prediction of the USDA although they approved the estimated rise in consumption of cotton. They said spinning mills have to keep a security stock of cotton to avert any future uncertainty.
After facing the blow of the covid pandemic, readymade garment export has increased 28% in the first 10 months of the current calendar year reaching $28.5 billion. Orders in Bangladesh increased as production was hindered in China and Vietnam.
Bangladesh Textile Mills Association (BTMA) chief executive officer Monsoor Ahmed told the TBS that a number of spinning mills are in the process of expansion with the rise in garment export. This will drive more import instead of reduced volume, he added. He however questioned how the USDA was sure of the actual stock of cotton with the factories.
Moreover, over the weekend, Pakistan Bureau of Statistics released its monthly trade report card, noting an alarming increase in the cotton import bill. 5MFY22 raw cotton import bill has increased 78 percent over same period last year, even as quantity imported recorded much more tapered growth of a little less than 32 percent.
That Pakistan has had to open the floodgates for imported cotton in the aftermath of repeated crop failures has now become common refrain. However, the pace at which raw material import bill has risen in the ongoing fiscal year is primarily attributable to international market prices, which reached their 125-month high in November 2021.
But is the import bill showing any signs of easing? So far, imports of only 1.4 million bales have been made between July and November 2021, according to PBS data, at average unit price of $2.14 per kg. Although average price of imports during the five-month period is still well under 12-month forecast, month-on-month import price is steadily rising.
The highest monthly quantum of imports so far landed during November, at average price of $2.28 per kg, up 30 cents since June. Meanwhile, 6-month moving average of global Cotlook “An” index climbed to $2.36 per kg, another decade high.
So what does rest of the year look for cotton imports? Local cotton output has finally hit a snag, with hopes of any reversal in fresh arrivals dashed as the country enters wheat cultivation season in full swing.
According to Pakistan Cotton Ginners Association (PCGA), cotton arrivals at local ginning factories fell short of 7.3 million bales by mid-December, with little hopes of the final tally making beyond 7.5 million bales.
Given low carryover inventory from the previous year, Pakistan’s annual import requirement during FY22 is anywhere north of 5 million bales. In FY21, import of 5 million bales made at (pandemic-driven) decade-low prices had raked in an import bill of $1.5 billion. With international prices at their peak, import bill is all set to breach $2 billion in the ongoing year.
Cotton import bill forecast faces a lot of upside and very little downside during the second half of the ongoing fiscal year. And with the country placing all its bets on textile exports revival, these imports must remain welcome. H2FY22 may very well see cotton imports quantum witnessing fresh heights. Policymakers cannot claim to be taken by surprise this time.
The Spot Rate Committee of the Karachi Cotton Association on Monday increased the spot rate by Rs 500 per maund and closed it at Rs 17300 per maund. The Polyester Fiber was available at Rs 245 per kg.
Copyright Business Recorder, 2021
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