Like most trade and industrial bodies in Pakistan, cotton traders are mostly focussing their attention on the forthcoming federal budget scheduled to be announced next Monday. Domestic ginners now hardly have 25,000 to 30,000 bales of unsold cotton left with them which are negligible quantities. It is now the Trading Corporation of Pakistan (TCP) which still has about 1,264,000 bales of unsold cotton left with it which are attracting attention of domestic mills and the exporters.
Quantities of cotton disposed by the Trading Corporation of Pakistan (TCP) in recent weeks show a rough sale of about 50,000 bales every week most of which is picked up by the mills at home. In this connection, the chairman of the Pakistan Textile Mills Association (APTMA), Arif Saeed, has again criticised the sale policy of the Trading Corporation of Pakistan (TCP) alleging that the Trading Corporation of Pakistan (TCP) is discriminating against the domestic spinners by providing more favourable prices to the exporters.
According to Arif Saeed, this discrimination in cotton prices against the domestic spinners means that competitors of Pakistan textiles like India and Bangladesh are obtaining our cotton at cheaper rates compared to the local textile industry. He stressed the necessity for the Trading Corporation of Pakistan (TCP) to review its cotton sales policy which is presently putting the domestic textile industry to a disadvantage.
From the 1,620,000 bales (170 kgs) procured by the Trading Corporation of Pakistan (TCP) this season (2004-05), 40,000 bales were lost to fire. From the balance of 1,580,000 bales left, 316,171 bales have been reportedly sold to domestic mills and the exporters, from which the mills have purchased 256,171 bales and the exporters have bought 60,000 bales.
Thus the Trading Corporation of Pakistan (TCP) now has 1,263,829 bales of unsold cotton lying with it. At the current pace of sales, the Trading Corporation of Pakistan (TCP) could possibly sell another 400,000 bales during the following two months and thus have unsold stocks of about 800,000 bales at the commencement of the next cotton season viz 1st of August, 2005.
In its next tender for sale of cotton bales, the Trading Corporation of Pakistan (TCP) is offering 55,000 bales for export and local sales for which the bids should reach at their office half an hour before noon PST on 4th of June, 2005 but should be valid till 8 pm on 6th of June 2005.
The tender is offering 25,000 bales of Grade 3 plus cotton from Karachi, 15,000 bales from Multan, 5,000 bales from Rohri, 5,000 bales of Grade 3 from Dera Ghazi Khan, all having length of 1-1/16 of an inch, and 5,000 bales of Grade 3 cotton from Chichawatni.
According to Nasim Usman, a prominent cotton broker, the government has advised the domestic mills to pick up all their cotton requirements from the Trading Corporation of Pakistan (TCP) by the middle of August 2005 whereafter all the Trading Corporation of Pakistan (TCP) stocks will be exported. There are also reports that Prime Minister Shaukat Aziz has directed the Trading Corporation of Pakistan (TCP) to dispose all its cotton stocks before the arrival of the new seasons.
Depressed cotton prices on the New York cotton futures market in recent weeks, subdued yarn prices and good supply of cotton at present in both home and foreign markets are keeping cotton prices lower. Lower grade cottons which are still available are said to be quoted from Rs 2100 to Rs 2200 per maund but the better class of cottons are reportedly being offered upto Rs 2325 per maund(37.32 kgs). Some sellers are said to be offering good quality cotton at Rs 2400 per maund or more but on one month's credit basis.
During the past several weeks, periodical rains in some parts of the cotton belt required resowing, humid weather was also posing some difficulty. However, now high temperatures in the plains and fairly adequate water supply in the cotton belt promise good prospects for the forthcoming cotton crop (2005-06).
Weather pundits are promising that heavy monsoon rains are likely to occur in the forthcoming months. According to one report, the meteorologists are predicting that Pakistan could possibly exper1ence very heavy rainfall accompanied by landslides, hill torrents and flash floods during the incoming monsoon season.
A possible combination of persisting westerly wind movements with monsoon precipitation may result in heavy downpour during the coming weeks. However, if the weather does not go awry, government target of 15 million bales of cotton output remains possible during the next season (2005-06).
Other news includes prospects of federal government announcing various proposals in the forthcoming budget to provide relief to the domes11c textile industry. There are reports that the entire range of cotton economy from ginning and spinning to weaving may be put under the "no-duty-no-drawback" regime thus removing it from the sales tax net.
Moreover, sources said that in order to make to domestic textile industry more competitive and viable and also to reduce or curb smuggling, import duties on a number of raw materials may be reduced to put Pakistan's premier industry on proper footing. These measures are likely to put the domestic textile industry in a better condition to be able to compete more equitably in the international markets.
In this connection, Federal Textile Minister Mushtaq Ali Cheema also told a meeting of the Federal Textile Board (FTB) end of last month that government was proposing more incentives for the textile sector. Mushtaq Ali Cheema disclosed that the proposals included withdrawal of sales tax from the textile sector on supply of goods and services for export-oriented industries. Cheema also said that sales tax procedure is not suitable for the textile sector.
Cotton sowing in lower Sindh is complete and is also in an advanced stage in central Sindh. All sowing in Sindh and in many parts of Punjab should be completed by the end of June and new crop cotton could start arriving in small quantities in July 2005 from lower Sindh if the weather remains clement.
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