Weekly Cotton Review: Spot rate soars to highest recorded level of Rs19,700 per maund

KARACHI: The rate of cotton remained stable. The spot rate after increasing by Rs 300 per maund reached at the highest level of Rs 19700 per maund. Increase of eighteen and a half Lac bales in the production of cotton was registered. Production of cotton is expected to be reached at 75 lac bales.

It is expected that more than eighty lac bales will have to be imported. Up till now agreements for the import of fifty lac bales have already been signed. Industry, especially textile sector, is severely affected by the gas crisis. Industrialists have staged a protest outside the office of Sui Southern Gas Company in Karachi.

In the local cotton market during the last week cautious buying of quality cotton was continued by textile and spinning sectors while ginners were involved in selling cotton on higher rates. As day by day the stock of cotton is decreasing due to which the ginners are increasing their rates as a result only needy mills are buying cotton now. The rate of cotton remained stable due to which the trading volume remained limited.

Pakistan Cotton Ginners Association has related statistics of cotton production till February 1, according to which during this period more than seventy four lac bales were produced which is eighteen lac bales more than the last years production of more than fifty five lac bales but the matter of concern is that the ginners had left the stock of one lac seventy thousand bales while an international organisation had the stock of one lac fifty thousand bales.

However, as the rate of cotton has reached at the highest level the parity issue arises between the rate of cotton and cotton yarn due to which only needy mills are involved in buying. Due to increase in the rates of cotton a financial crisis is arising in the market. It is expected that stock of cotton will finish in one and a half months and the small textile and spinning mills will have to adopt other options.

The rate of cotton in Sindh as per quality is in between Rs 17,000 to Rs 20,000 per maund while Phutti is not available for trading. The rate of cotton in Punjab is in between Rs 18500 to Rs 20,000 per maund. The rate of Phutti is in between Rs 7000 to Rs 8700 per 40 kg.

The increasing trend in the rate of Khal and Banola is continued while in Balochistan all the ginning factories have already stopped their operations. The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 300 per maund and closed it at Rs 19700 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all a bullish trend prevails in the international cotton market. The Rate of Future Trading of New York Cotton after increasing reached at 129 American cents. According to the USDA weekly sales and exports report more than three lac thirty two thousand bales were sold which was fifteen percent less as compared to the sale of last week.

This time too China was on number one after buying more than ninety thousand bales; Vietnam was on number second with more than fifty eight thousand bales, India was on number third with more than forty four thousand bales. More than three lac two thousand bales were exported that was fifty three percent less as compared to last week. China was on number one after importing one lac thirty thousand bales, Pakistan was on number two with forty four thousand bales while Vietnam was on number third after importing more than thirty thousand bales.

The rates of cotton in Brazil, Central Asia and Africa remained over all high while in India the production of cotton was more than twelve lac bales less as compared to initial estimates while local mills in India were requesting to the government for reducing import duty on cotton as the demand of local mills went increased by ten to twelve lac bales.

Seed cotton (Phutti) equivalent to over 7.4 million or exactly 74,20,917 bales have reached ginning factories across the country till February 1, 2022 registering increase of 33.19 percent as compared to corresponding period of last year.

According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA), over 7.4 million or 74,10,296 bales have undergone the ginning process, i.e., converted into bales. Cotton arrivals in Punjab were recorded at over 3.9 million or 39,08,686 bales registering a surplus of 13.73 percent as compared to corresponding period of last year when arrivals were recorded 34,36,731 bales.

Sindh generated over 3.5 million or 35,12,231 bales registering an increase of 64.51 pc as compared to corresponding period of last year when arrivals were recorded 21,34,935 bales.

Textile mills bought 72,33,312 bales while exporters purchased 16,000 bales and Trading Corporation of Pakistan (TCP) didn’t buy during the cotton season 2021-22. Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that this year sowing season of cotton started one month earlier. Weather conditions remain favourable while the government has announced the support price of Phutti at the rate of Rs 5000 per 40 Kg.

He said that this year due to the arrival of Afghani Phutti and seed in many areas Afghani cotton was cultivated so we can say that this year Pak- Afghan cotton was prepared.

Naseem also told that all the sectors from Fashion to Field earned huge profits because of extremely high cotton rates and the rates of textile products. It is expected that area of cultivation of cotton will increase because this year farmers got good rates of Phutti. It is expected that seventy five lac bales will be produced in the country while around eighty lac bales will have to be imported. Up till now agreements for the import of fifty lac bales have been signed.

Copyright Business Recorder, 2022