KARACHI: The new wave of COVID 19 has negative impact on the rate of cotton and the rate of cotton decreased by Rs. 300 per maund. There is a need to take steps on war footings to increase the production of cotton. It’s a situation like ‘Now or Never’. The cotton grower is dishearten and taking interest in growing other crops. It was very difficult rather impossible to convince them that they will again start growing cotton.
In the local cotton market trading volume remained low during the last week due to the cautious buying by the textile and spinning mills. The ginners were avoiding selling cotton due to high rates and were not ready to do business on loss. On the other hand another reason of cautious buying by the textile mills is a new wave of COVID 19 is in some countries and as a result of which if the lock down was again imposed by United States and Europe then it will have a negative impact on business especially the exports of textile products will be effected.
On the other hand delivery of cotton imported from foreign countries will be affected. The big groups were abstaining from signing agreements of importing cotton from abroad due to uncertainty.
The rate of dollar is continuously decreasing as compared to Pakistani Rupee and the rate of dollar after decreasing by Rs 6 reached at Rs 160. It is expected that rate of dollar after depreciation will reach at Rs 155. The depreciation of dollar will have positive impact on import of cotton while it has negative impact on exports of textile products. However, trading volume will remain low due to the threats of COVID 19. Bearish trend was witnessed in international commodities markets due to circulation of news of increasing threats of COVID 19. It is feared that there is uncertainty in near future.
The rate of cotton in Sindh is in between Rs 8600 to Rs 10,000 per maund. The rate of Phutti is in between Rs 4700 to Rs 5100 per 40 Kg. The rate of cotton in Punjab is in between Rs 9800 to Rs 10,200 per maund. The rate of Phutti is in between RS 4700 to Rs 5300 per 40 Kg. The rate of cotton in Balochistan is in between Rs 9600 Rs 9800 while the rate of Phutti of good quality is in between Rs 5000 to Rs 5400 per 40 Kg.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 100 per maund and closed it at Rs 10,000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that mixed trend was witnessed in international cotton market. Firstly, the Rate of Promise (Waday Ka Bhao) of New York Cotton reached at the highest level of 72 American cents for December. But on Friday due to fear of lock down after the increase in COVID 19 especially in Europe bearish trend was seen in commodities market world wide. The Rate of Promise (Waday Ka Bhao) for December of New York Cotton reached 69 American cents after decreasing.
The effects of the storm have disappeared. Even the weekly USDA export report was encouraging an increase of 27 % was witnessed as compared to last week. Pakistan was the biggest importer this week also. It is feared that wave of COVID 19 will increase in coming days as result of which rate of cotton will come down. The American elections are going to be held this week. The elections will have an impact on the rate of cotton. Moreover, the rate of cotton can be decreased in India, Brazil, Argentina and Pakistan due to the second wave of COVID 19. Large textile groups buy cotton from abroad due to sharp decline in cotton production in Pakistan. More import deals are being made. Importers of cotton told that so far deals for the import of about 27 lac bales have been signed.
Considering the need for textile mills, about 50 lac bales of cotton will have to be imported. Up till now the dollar is decreasing as compared to Pakistani Rupee due to which cotton imports will be relatively cheap but will have a negative impact on textile exports.
According to the information other than cotton, cotton yarn, grey cloth and comber is importing from abroad. However, our textile mills are exporting cotton yarn of small count to China. Moreover, there is a good business of yarn is going on in the market and export orders are coming from abroad in good numbers but the threat of coronavirus is increasing due to which exporters are worried due to uncertainty.
The country’s cotton production continues to decline at an alarming rate. it is said that if immediate action is not taken on a war footing, the cotton crop will decline further in the coming days. But the nation should not be disappointed. There is an urgent need to encourage cotton growers. The government should take steps on war footings. At this time there is an urgent need for arranging good quality seeds and pure pesticides. If it is possible seeds should be imported from abroad at least technology should be imported from abroad. The researchers and scientists from abroad should be hired to train and guide local scientists and researchers. If irresponsibility is still shown, there is a risk of further decline in cotton production in the coming years.
Prime Minister Imran Khan had constituted a Cotton Task Force headed by central leader of All Pakistan Textile Mills Association Gohar Ejaz. Gohar said that he has included five major textile groups in the CTF. They will play their role in increasing the production of cotton.
Before that three big textile groups had made a company Sanifa Agricultural Services five to six years ago for producing good quality seeds. Keeping in mind performance of this company we can say that how much private sector can be successful in increasing the production of cotton in the country. Sanifa is private venture of three big textile companies. It is possible that they are part of CTF. Guidance can be taken from them but so far their performance has not been revealed. They are not producing cotton seeds at the national level. They are working privately.
The newly formed task force will take this issue seriously and formulate a strategy so that the results can be seen. We should have good hopes.
Moreover, in its tweet Advisor to Prime Minister on Commerce Abdul Razak Dawood said “Apparel is the engine of growth in the textile sector and availability of yarn at competitive prices is the pillar of strength. All sectors have to play their respective roles to maximise overall exports,”
In another tweet Razak said “MOC held meeting of stake holders of spinners and apparel manufacturers to discuss availability of yarns and their prices. In light of rising prices MOC is considering reducing duties on various yarns and preparing a summary for the ECC”.
Copyright Business Recorder, 2020
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