KARACHI: The increasing trend in the prices of cotton witnessed due to the lesser supply of Phutti and increase in its demand. The anomalies committee of Federal Board of Revenue (FBR) will review the recommendations of textile sector and the ginners. The threat of locust attack is increasing.
In the local cotton market during the last week, the prices of cotton and Phutti increased by Rs 300 to Rs 400 per maund because the textile sector took interest in the buying of cotton and Phutti. The supply of Phutti is limited and extraordinary number of ginning factories has started their operations. Ten ginning factories located in the areas of Sanghar, Tandoo Adam, Kotri, and Moro have started their operations while four ginning factories of Punjab have partially started their operations. They were running their factories on the Phutti coming from Sindh. The amount of Phutti which is coming equal to three to four lots while 14 factories are buyers so naturally the rate of cotton and Phutti increased. Many textile mills were interested in buying of new cotton. Till now, ginners had signed agreements for the sale of five thousand bales. The delivery time of some deals is after June 25. If the situation remains same, it is expected that rate of cotton and Phutti will further increase.
On the other hand bullish trend was witnessed in cotton business. It is expected that stock of only three lac bales were left. Though, Pakistan Cotton Ginners Association has not released the final statistics of cotton production. They were unable to collect the due to coronavirus out break. PCGA may release the report on June 30.
The rate of new cotton in Sindh is between Rs 8200 to Rs 8300 per maund while in Punjab it remained stable at Rs 8500 per maund. The rate of Phutti in Sindh is between Rs 3900 to Rs 4200 per 40 kg while in Punjab it's between Rs 4200 to Rs 4400 per 40 kg. The rate of Banola in Sindh is between Rs 2000 to Rs 2100 per maund while in Punjab it's between Rs 2200 to Rs 2300 per maund. The rate of old cotton is between Rs 7000 to Rs 8300 per maund.
Government has not yet announced any estimates regarding production of new cotton crop in the country. However, Director General Agriculture (Extension) and major crop reporting department has issued an estimate according to which the target of cotton cultivation is 2.663 million hectare out of which sowing is completed on 2.316 million hectare which is 85 percent of the target. It is pertinent to mention here that area of cultivation is five percent less as compared to the last year's area of cultivation of 2.439 million hectare.
Moreover, it is too early to give any estimates of cotton production especially this year because the quality of seeds is low. The germination level is also very low and locusts have also caused severe damage to crops. However, water is available in abundant quantity.
Karachi Cotton Brokers Forum chairman Naseem Usman told that mixed trend was witnessed in international cotton market. There are many reasons due to which the Rate of Promise (Waday Ka Bhao) of cotton saw a significant increase in the New York cotton market
It is expected that China may be attracted towards the United States or Pakistan due to the conflict between China and Pakistan. It is also expected that after opening of international retail markets, which were closed due to the corona pandemic, buying will be increased. The other reason is that due to less rains there is a drought like situation in Texas which is a cotton producing area.
In the last week, an increase in exports was witnessed in New York cotton market as China emerges being a big buyer. On the other hand the rate of cotton remained stable in China while bearish trend was witnessed in Indian cotton market.
The debate was going on in press and social media regarding the future of textile industry and export sector as government had not announced any incentives for the sector in federal budget 2020-21 against expectations. The government had overlooked these sectors completely. Though government had reduced the customs duty on the raw materials used in these sectors, however, no direct relief was announced. In the same way government fully ignored the ginning sector.
The representatives of these sectors disappointed because they had been given assurances prior the budget presentation. The representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and other chambers criticized the government as well as requested review the demands of the industry.
As a result, government had constituted a three member Anomalies Committee headed by Adviser to the Prime Minister on Trade Abdul Razzaq Dawood. The other committee members are Federal Minister for Industries and Production Hammad Azhar and FBR chairperson Nosheen Amjad. The committee will identify and remove the technical and legal anomalies in the Finance Bill.
Sindh government has announced many initiatives in the budget including allocation of handsome amount for controlling locust attack. Moreover, Sindh Chief Minister Syed Muraad Ali Shah hinted at starting Grow More Cotton movement in the province.
This year the businesses remained closed due to the spread of Covid-19. Textile mills were remained closed for almost two months due to which the season went a head by two months.
The stocks of cotton yarn and textile products were piled up. Majority of the foreign importers either cancelled or deferred their deals due to which the textile sector faced difficulties. On the other hand, government also ignored this sector in the budget.
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