KARACHI: The rate of the cotton remained stable. Mixed trend was witnessed in the international cotton markets. Rains may affect crops. A lively discussion on cotton issues was organized by Center for Global and Strategic Studies. Great turmoil in the textile and industrial sectors after the Supreme Court's verdict on Gas Infrastructure Development Cess observed.
In the local cotton market during the last week mixed trend was seen in the rate of cotton. Bullish trend was witnessed in the initial days of the week because the supply of Phutti was a little bit affected due to the rains however, after the rains the quality of Phutti was also affected due to which fluctuation was witnessed in the rate according to the quality of the Phutti. The buying of cotton remained continued by the textile and spinning mills.
According to the monthly report of WASDE there will be increase in the production of cotton while demand of cotton will be decreased. The report sees decrease in the rate of cotton as a result of increase in the stock of cotton.
Moreover, USDA weekly report the exports decreased by twenty percent. Keeping in mind the international reports it is expected that bearish trend will be witnessed in the cotton market in the coming days. However, rains will have positive impact on the cotton in some areas and may have negative impact in some areas. The month of August is considered to be difficult for cotton crop. Generally the month of September considered being difficult for cotton crop but due to the difference of ten days now the month of August is considered to be difficult for the crop. The officials of agriculture department are instructing farmers to be careful.
The rate of cotton in Sindh is in between Rs 8200 to Rs 8300 per maund while the rate of Phutti is in between Rs 3300 to Rs 3800 per 40 Kg. The rate of Banola is in between Rs 1500 to Rs 1550 per maund. The rate of cotton in Punjab is in between Rs 8550 to Rs 8650 per maund while the rate of Phutti is in between Rs 3600 to Rs 4000 per 40 kg. The rate of Banola is in between Rs 1650 to Rs 1750 per maund. The rate of cotton in Balochistan is in between Rs 8350 to Rs 8375 per maund while the rate of Phutti is in between Rs 3700 to Rs 3900 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 100 per maund and closed it at Rs 8350 per maund. Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all fluctuation was witnessed in the rate of cotton worldwide. According to USDA weekly report 20 percent decrease was witnessed in the export while China remained the biggest importer.
Moreover, the monthly report of WASDE regarding world production and demand came positive against the expectations. As per report the world production of cotton increased by 1.10 percent while the demand witnessed an unprecedented decrease by 1.08 percent while low trading volume of cotton witnessed world wide. Decrease was witnessed in the opening stock while increase of twenty lac forty thousand bales was witnessed in ending stock. The report may be the cause of bearish trend in the market.
According to the report the production of cotton in Pakistan remained stable with 6.50 million bales of weight (217.72 kg) while there will be decline in demand, import and export. There will be an increase of 4.21 percent in production of cotton in India while demand will be decreased by 5 lac bales. Unprecedented, there is an increase of 3.31 percent in the production of American cotton while there will be a decrease of one lac bales in the demand of cotton. There is no change in the production of cotton in China while there is a decrease of five lac bales witnessed in the demand. The rate of cotton remained stable in China while bearish trend was witnessed in the rate of cotton in Brazil and Argentina while the rate of cotton remained stable in India.
Contradictory estimates are coming regarding production of cotton. According to the chairman Pakistan Cotton Ginners Association Ahsanul Haq it is expected that production of cotton will be decreased due to rains. Heavy rains in cotton zones across the country have once again led to a decline in Pakistan's total cotton production. As a result, the country's textile mills have to import more cotton this year than expected. Chairman Cotton Ginners Forum Ahsanul Haq told that cotton crop was affected due to rains in the cotton belt of Punjab and Sindh in past few days. He also said that Pakistani textile mills are currently seeing record export orders for all types of products.
According to reports, Pakistan is one of the few countries in the world to have the highest export orders for textile products after the COVID 19. It is believed that Pakistani textile exports between July and December 2020 could be around the same as it was in FY 2019-20.
The federal government has restored electricity subsidy tariff for the full export textile sector till June 30, 2021, but the textile exports may be affected by not giving such type of incentives to the textile industry which is not directly involved in export but they are selling products to the export sector. There fore, subsidised electricity tariff should be restored for the allied industry.
Yesterday a lively discussion was organized by Center for Global and Strategic studies on the problems faced by cotton industry in Pakistan. The discussion was attended by the representatives of agriculture department, Federation of Pakistan Chambers of Commerce and Industry and Pakistan Cotton Ginners Association. They gave suggestion regarding increasing the production of cotton and enhancing the quality of cotton in the country.
While expressing his views on this occasion Federal Minister for National Food Security Syed Fakhar Imam said that an important reason besides other reasons for low cotton production in the country is that cotton farmers were not getting a fair price.
Few days back the Supreme Court has announced its decision on Gas Infrastructure Development Cess (GIDC), directing recovery of GIDC payables from the industries of worth Rs 417 billion due to which there is an uncertainty in the textile sector.
Copyright Business Recorder, 2020
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