KARACHI: The local cotton market remained stable on Thursday. Market sources said that either there is a buyer of high quality cotton or low quality cotton in the market. However, here is hardly any buyer of mixed quality cotton.
Cotton Analyst Naseem Usman told that the Economic Coordination Committee of the Cabinet Wednesday approved removal of Additional Customs Duties (ACDs) and Regulatory Duties (RDs) on 169 selected HS Codes of textile sector, including fibers, yarns and fabrics of Nylon, Viscose, Acrylic, Rayon, Silk, Wool and vegetable-based fibers like Hemp, etc.
The summary was moved by Ministry of Commerce, after approval of the National Tariff Policy Board in its meeting held on August 24, 2020.
According to sources in Finance Division custom duty and additional custom duty on 169 tariff lines was ranging from 2 to 16 per cent and 2 to 7 per cent respectively.
Naseem told that August 2020 was supposed to be the low point in Pakistan's external trade scorecard. Heavy monsoon rains across the country disrupted supply chain, with the destruction in Karachi particularly affecting the port activity.
As a result, monthly figures for both goods imports and exports have recorded double digit decline. Yet, textile group imports stand out, which recorded nearly 40 percent rise on a year-on-year basis. Why? Raw cotton imports.
As per PBS Advance Releases, Pakistan recorded its highest ever raw cotton import bill for the month of August (on a seasonal basis) this year. In fact, raw cotton import volume during the month was 12.5 times higher than same month last year and 3.5 times higher than average August imports over the last decade.
Meanwhile, ICE cotton futures fell on Wednesday as the US dollar rose to a near two-month peak as a resurgence in new coronavirus cases in Europe increased fears about the global economic recovery.
Cotton contracts for December fell 0.39 cent, or 0.6%, to 65.15 cents per lb, at 2:29 p.m. EDT (1829 GMT), trading within a range of 64.8 and 65.46. "The dollar is stronger and that is because of the relapse of COVID-19 (cases) in Europe and Great Britain. The UK just announced that they are going to basically shutdown until next March and that is scaring the currency traders," said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
Naseem told that the cotton crop has disappointed - yet again. A phenomenon reminiscent of the outgoing decade, which saw the sweet lure of sugarcane almost singlehandedly shave off a fifth of cotton's cultivated area, translating into a 29% drop in yield. But volumes - and a palpable substitution - do not tell the full story. They do not even provide an unequivocal account of cotton's relegation in the agronomic pecking order. The substitution and dwindling yield are far from an inexplicable trajectory, however, and represent unmistakably inevitable developments as structural characteristics of cotton cultivation in the country have gradually but definitely facilitated its waning economic appeal for farmers.
The low quality of cotton yield in Pakistan was an impending feature of the textile value-chain even before the crop substitution to sugarcane began. Pakistan, in fact, suffers from one of the worst contamination rates in the world with its rate more than seven times the international standard. One of the primary reasons for this is the out-dated and ineffective picking methods that structurally induct high trash content into the value-chain and directly lead to amplified ginning losses and lower quality of yarn.
Another reason for cotton's dwindling quality output is the below-par pace of seed research.
Naseem told that according to the statistics released by Pakistan Cotton Ginners Association till September 15, 2020 10 lac 35 thousand bales were produced in the country which is 44.12% less as compared to the last years cotton production of 18 lac 52 thousand bales.
He also told that textile imports will further increase as a result of which country's economy will further deteriorate.
According to the first estimate released by Agriculture Crop Reporting Service, the sowing of cultivated area during 2020-21 season witnessed a decline of 12.0 % owing to major reason behind this was non availability of good quality of seeds. The reason monsoon spell had caused huge loss in Sindh especially in the districts of Sanghar, Mirpurkhas, Umer Kot, Badin, Tando Allah Yar, Tando Muhammad Khan, Hyderabad and Dadu.
The report indicated that 25% cotton crop in Sindh has been damaged quality and supply of seed cotton was affected. Picking was also affected due to rains. Similarly, the rains in cotton belt of Punjab have caused loss to cotton crop. The high moisture makes the cotton crop susceptible to Pink boll worm attacks. The pink boll worm attacks can damage around 20 to 30 percent of the crop and affect the lint quality. The farmers are advised to immediately drain out water from their fields.
He also told that this year due to torrential rains, unsuitable weather conditions, corona lockdown and especially due to the substandard seeds cotton production was badly effected.
Amid coronavirus cases increasing in competitor economies including India and Bangladesh, garment orders are rapidly shifting to Pakistan.
He also told that 1000 bales of Shahdadpur were sold at Rs 8250, 1600 bales of Tando Adam were sold at Rs 8250 to Rs 8275, 400 bales of Chodagi were sold at Rs 8300, 400 bales of Sarkand were sold at Rs 8550, 1000 bales of Khairpur were sold at Rs 8800 to Rs 8850, 600 bales of Saleh Put were sold at Rs 8750, 200 bales of Khanpur were sold at Rs 9100, 200 bales of Rahim Yar Khan were sold at Rs 9100, 200 bales of Bago Bahar were sold at Rs 9075, 400 bales of Bahawal Nagar, 600 bales of Dera Ghazi Khan, 400 bales of Chistian, 600 bales of Faqeerwali, 800 bales of Fort Abbas, 1000 bales of Haroonabad, 200 bales of Shadan Lund, 400 bales of Taunsa Sharif, 200 bales of Yazman Mandi were sold at Rs9000, 200 bales of Bahawalpur, 200 bales of Muhammadpur Dewan were sold at Rs 8950, 600 bales of Layyah were sold at Rs 8225 to Rs 8900, 600 bales of Chichawatni were sold at Rs 8850 to Rs 8900, 600 bales of Burewala were sold at Rs 8950 to Rs 8900, 600 bales of Khanewal were sold at Rs 8850 to Rs 8900, 200 bales of Kot Adu were sold at RS 8850, 200 bales of Khairpur Thaniwali were sold at Rs 8800, 800 bales of Vehari were sold at Rs 8000 to RS 8600, 1200 bales of Gojra were sold at Rs 8000.
He told that rate of cotton in Sindh was in between Rs 8300 to Rs 8800. The rate of cotton in Punjab is in between Rs 8800 to Rs 9100. He also told that Phutti of Sindh was sold in between Rs 3600 to Rs 4100 per 40 kg. The rate of Phutti in Punjab is in between Rs 3800 to Rs 4400 per 40 kg.
The rate of Banola in Sindh was in between Rs 1500 to Rs 1700 while the price of Banola in Punjab was in between Rs 1700 to Rs 1800. The rate of cotton in Balochistan is in between Rs 8600 to Rs 8750 while the rate of Phutti is in between Rs 4300 to Rs 4900.
The spot rate remained unchanged at Rs 8800 per maund. The polyester fiber was available at Rs 153 per kg.
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