KARACHI: Alarming decline of 2.8 million bales in the production of cotton. Under the influence of bullish trend in the cotton market the rate of cotton increased in the local market by Rs 700 per maund. The textile mills will have to import 7 million bales of cotton of worth 6 billion dollars to fulfil its needs. Up till now agreements for the import of 3.8 million bales were signed. Other than cotton Phutti arrived from Afghanistan. Next year Afghan cotton will be cultivated in Pakistan.
In the local cotton market during the last week the local textile and spinning mills has increased their interest in the buying of good quality cotton while ginners were involved in cautious selling because of chances of increase in the rate of cotton as a result of which the prices of cotton increased massively while trading volume also increased.
The reason behind massive increase in the rate of cotton is increase of prices of cotton internationally especially the rate of cotton in New York Cotton Market increased by 10 cents during the last two weeks. The major reason behind this increase in prices is increase in the exports of American cotton under the influence of which the rate of cotton in other countries also increased.
In the local cotton market there is a significant increase of Rs 500 to Rs 700 per maund in the rate of cotton. Second time the rate of cotton reached at the highest level of Rs 10,300 per maund. Market sources told that as the demand increased the rate of cotton may cross Rs 10,500 per maund which will be highest in season. Due to increase in the rate of New York Cotton and increase in the import price and due to the delay in the delivery of cotton imported from abroad by some mills they are fulfilling their needs by buying cotton from local market.
The rate of cotton in Sindh is in between Rs 9000 to Rs 10,000 per maund. The rate of Phutti is in between Rs 3800 to Rs 4800 per 40 Kg. The rate of cotton in Punjab is in between Rs 9300 to Rs 10,300 per maund. The rate of Phutti is in between RS 3800 to Rs 5200 per 40 Kg. In Balochistan stock of around 6000 bales were left while almost no Phutti was available.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 350 per maund and closed it at Rs 9850 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that significant increase was witnessed in prices of cotton in international market especially under the influence of significant increase in the Rate of Promise (Waday Ka Bhao) of New York Cotton. USDA weekly export report second time shows an overall increase of exports 400,000 bales of cotton. This time too China is on the top of the list by importing more than 200,000 bales while Pakistan was the second biggest importer by importing more than 93000 bales. In fact, significant increase was witnessed in the Rate of Promise (Waday Ka Bhao) of New York Cotton because last week’s USDA’s export report shows an increase of 22% in exports and production report of World Agricultural Supply and Demand Estimates (WASDE) showed a decline of more than 2.2 million in the production of cotton worldwide while 15% increase in demand while showed a significant decline in closing stock.
Increasing trend remained continued in the rate of cotton in Brazil, Argentina and Central Asian states while especially the rate of cotton in India increased by Rs 2600 per candy (356 kg) which reached at the highest level of Rs 42,500 per candy while it is hinted that rate may increase further.
The protest of farmers is going on in India for the last three weeks and is gaining momentum but up till now it has not showed any negative impact on the rate of cotton. The significant reason behind increasing trend in the prices of cotton in India is that in order to facilitate the farmers state owned Cotton Cooperation of India is buying Phutti and in order to facilitate ginners CCI is buying cotton from them. Moreover, government also gave incentives to the farmers.
On contrary to this it looks that Pakistani government is not interested in agriculture sector and especially not interested in increasing the production of cotton due to which the production of cotton decreased from 15 million bales to 6 million bales. Farmers have given up growing of cotton due to continuous loss. Government should convince farmers to grow cotton otherwise there will be no cotton produced in the country and country’s biggest textile industry will have to rely on imported cotton.
This year especially 200,000 bales will be imported from Afghanistan. Moreover, Phutti in abundance is also coming from Afghanistan. Sources told that Phutti equalling to 10,000 bales has reached Pakistan. Phutti in few factories of Dera Ghazi Khan were coming from Afghanistan but this year Phutti in abundant quantity from Afghanistan has arrived in ginning factories of Punjab, Sindh and Balochistan. Seed companies are buying banola of Afghani cotton from ginners which will be grown locally in coming season.
Cotton production in the country witnessed an alarming decline of 2.8 million bales, according to a report released by Pakistan Cotton Ginners Association. The report says that more than 5 million bales were produced in the country which is 35.67 percent less as compared to more than 7 million bales produced till December 15 last year.
According to the statistics released by Pakistan Cotton Ginners Association till December 15 local textile mills bought more than 4.1 million bales which are around 35.06 percent less as compared to the last year buying of more than 6.5 million bales during this period. The ginners had the stock of more than 800,000 bales which is 35.06 percent less as compared to the last year stock of more than 1.2 million bales. According to the report 384 ginning factories are running as compared to 424 ginning factories which were working last year during this period.
In Punjab 2.9 million bales were produced which is 1.4 million bales less as compared to the last years production of 4.4 million bales. In Sindh 2.8 million bales were produced which is 1.3 million bales less than the last years production. District Sanghar of Sindh is on top of the list by producing more than 789, 000 bales while district Bahawalpur is second by producing 783,000 bales.
Chairman Karachi Cotton Brokers Forum Naseem Usman said that this year Pakistan’s textile sector is running on full capacity due to which the demand of cotton may reach more than 15 million bales. He told that around 6 million bales will be produced in the country around 7 million bales of around 6 billion dollars will have to be imported from abroad in order to fulfil the demands of the local industry. Up till now agreements for the import of 3.8 million bales have been signed.
Copyright Business Recorder, 2020
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