KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Monday increased the spot rate by Rs 100 per maund and closed it at Rs 9150 per maund. The local cotton market remained bullish on Monday. The rate of cotton reached at Rs 9500 per maund which is highest in the season. Market sources that supply of Phutti is 19% less than previous year. The rate of cotton is increasing due to the non-availability of quality Phutti in the market.
Cotton Analyst Naseem Usman told that that import agreements of 15 lac bales were signed. It is expected that 45 lac bales will be imported.
Earlier, Federal Minister for National Food Security and Research (NFSR), Syed Fakhar Imam while chairing meeting on Cotton Crop Assessment Committee said that Pakistan's cotton sector would surely improve in coming years as effective measures are being taken. He was of the view that issues of domestic cotton production are seed quality, absence of new seed technology, heat waves and climate change, cotton leaf curl virus, pink bollworm and white fly.
He also said that there is 4% decline in cotton area. Resultantly pest complex has changed. In case of cotton, loss is observed in Multan division. Comparatively Bahawalpur and DG Khan is doing better. Punjab assessed production target between 5.30mn bales. Sindh also mentioned that due to heavy rains cotton crop is facing lots of issues. Mirpurkhas and Sanghar has faced crop damage. Sindh gave target of 3mn bales. KPK gave target of 0.065mn bales and Balochistan gave target of 0.291mn bales. The total estimated production of the country will be 8.597mn bales.
Pakistan Meteorological Department (PMD) mentioned that for next 6 to 8 week there will be dry weather. FSC&RD mentioned that this year for cotton seed the target area for inspection is 365000 acres and already inspected area is 147000 acres. This year target expectation for cotton seed is 72176 metric tonnes.
Moreover, Pakistan exported US 54.613 million dollars of cotton yarn in August, registering a year-on-year decline of 51.36%, China Economic Net (CEN) reported on Friday quoting official sources. However, its cotton yarn export to China has surged in the same month.
As data from China's General Administration of Customs shows, China imported US 41.836 million dollars worth of cotton yarn from Pakistan in August, which is 4.36 times the 9.592 million dollars in the same period last year, with a year-on-year increase of 336 percent.
Pakistan mainly produces low-count sirospun yarns, such as those of 8s or 10s, generally below 21s, which are mostly imported to south China's Guangdong province to be made into denim, said Huang Xifeng, sales executive of import and export department at Litai Xingshi (Taicang) Holding Co Ltd.
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.
Moreover, the collection of sales tax from textile sector registered a six-fold increase in fiscal year 2019/2020 owing to elimination of zero-rated tax regime. According to official statistics released by Federal Board of Revenue (FBR) the sales tax collection from textile sectors sharply increased to Rs 61.2 billion during fiscal year 2019/2020 as compared with Rs8.7 billion in the preceding fiscal year, showing a growth of 602 percent.
The unprecedented growth in sales tax collection from this sector can be attributed to elimination of zero-rated scheme through Finance Act, 2019. In the budget 2019/2020, the government decided to eliminate zero-rating scheme for textile sector and imposed normal 17 percent sales tax on all supply of textile products, except for those subject to exports.
The decision to eliminate the zero-rating was taken due to gross misuse of the scheme. The scheme also attracted issuance of bogus refunds on back of fake and flying invoices resulting huge monetary losses to the national exchequer.
However, in order to resolve the issue of exports in obtaining refunds under new schemes from July 01, 2019 the FBR introduced Fully Automated Sales Tax e-Refund (FASTER) system with a commitment that the refunds would be issued in 72 hours.
Sources in the FBR said that the collection of sales tax from textile sector would have been much higher but it was restricted due to economic slowdown after COVID-19.
He also told that 100 bales of Tando Adam were sold at RS 8400 to Rs 8600, 1000 bales of Sanghar were sold at Rs 8150 to Rs 8250, 1000 bales of Haronabad were sold at Rs 9300 to Rs 9500, 800 bales of Faqeerwali were sold at RS 9300 to Rs 9400, 600 bales of Fort Abbas were sold at Rs 9350 to Rs 9400, 400 bales of Hasilpur were sold at Rs 9400, 400 bales of Chichawatni were sold at RS 9225, 400 bales of Mian Channu were sold at Rs 9200.
He told that rate of cotton in Sindh was in between Rs8300 to Rs 9200. The rate of cotton in Punjab is in between Rs 8800 to Rs 9500. He also told that Phutti of Sindh was sold in between Rs 3800 to Rs 4600 per 40 kg. The rate of Phutti in Punjab is in between Rs 3800 to Rs 4800 per 40 kg.
The rate of Banola in Sindh was in between Rs 1700 to Rs 1800 while the price of Banola in Punjab was in between Rs 1800 to Rs 1900. The rate of cotton in Balochistan is in between Rs 8900 to Rs 9000 while the rate of Phutti is in between Rs 4500 to Rs 5500.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 9150 per maund. The polyester fiber was available at Rs 153 per kg.
Copyright Business Recorder, 2020
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