KARACHI: The local cotton market remained stable on Friday. Market sources told that trading volume was low because the stock of the cotton was low and the production of the cotton is very low. ICE cotton futures declined for the third straight session on Thursday, as a stronger dollar offset support from a federal report that showed robust exports of the natural fibre.
Cotton contracts for May fell 1.04 cents, or 1.2% to 87.41 cents per lb by 1:54 pm EST (1854 GMT). It traded within a range of 87.4 to 89.39 cents a lb.
The US dollar advanced 0.7% against a basket of currencies, making the natural fibre more expensive for buyers in other currencies.
“The market has changed from a straight-up bull market to a bit of sideways issue,” said Rogers Varner, president of Varner Brokerage in Cleveland.
The market will likely trade between the mid-80 and mid-90 cent level, Varner added, noting that a decrease in ending stocks in the USDA’s World Supply and Demand Estimates (WASDE) report due next week would be perceived as bullish.
Prime Minister Imran Khan nodded to cross-border import of cotton yarn as the shortage of industrial input is feared to stymie recovery in textile exports.
Commerce Adviser Razak Dawood said the Prime Minister showed his concern on shortage and escalating cotton yarn prices in the country during a meeting.
“[He] instructed to take necessary measures, including cross border trade of cotton yarn, to keep the momentum of value-added exports,” Dawood wrote on Twitter.
The government is considering import of cotton from India to meet the local demands, according to media reports.
Cotton production came down to 5.5 million bales from as much as 15 million bales recoded annually in previous years, causing unstoppable rise in its prices.
Textile and clothing exports increased more than eight percent to $8.8 billion in the seven months of the current fiscal year. The growth pace can slow down amid the shortage of raw materials, according to traders who called for duty-free imports of yarn from any country, including India.
Pakistan Yarn Merchants Association expressed deep concern over the unavailability of cotton yarn and its price reaching to an all-time high. It asked the government to immediately allow duty-free import of yarn and cotton from India to save the textile industry from collapse
If export orders are not fulfilled on time, the business will adversely be affected, according to the association.
The association’s office bearers said a large number of export orders from China, Bangladesh and India were transferred to Pakistani exporters, which led to an increase in production activities. However, these days the cost has risen sharply due to non-availability of raw materials as per the demand of the textile industry and the high price of yarn in the local markets.
“If we do not manage to import raw materials from other countries, including India, then export orders that have been transferred to Pakistan will not be fulfilled,” the association said in a statement.
“This will tarnish Pakistan’s image in the world and we will not get new orders.”
The cotton production in the country witnessed an alarming decline of 34.18 percent shortfall as compared to corresponding period of 2020 when arrivals comprised over 8.5 million bales.
According to the statistics released by Pakistan Cotton Ginners Association till March 1, on Wednesday exactly 5,631,191 bales underwent the ginning process i.e. conversion to bales. Cotton arrivals in Punjab were recorded at over 3.5 million or 3,501,580 bales, while Sindh generated just over 2.1 million or 2,136,169 bales.
Cotton Analyst Naseem Usman told that textile sector’s profitability increased significantly by 32pc YoY during the first half (July-Dec) of FY21 primarily due to an increase in exports, improvement in other income, and decline in finance cost.
According to data shared by Topline Pakistan Research, the country’s overall textile revenues increased 12pc YoY during the period under review, with exports rising 8pc YoY in USD terms and 13pc YoY in PKR terms. Topline’s data regarding the listed textile composite sector is based on profitability analysis of 21 companies that represent 82pc of the sector’s market capitalization. “While the backlog of orders from 2HFY20 and diversion of orders from other regional countries like India and Bangladesh amid Covid-19 lockdowns/restrictions has helped support exports, the up tick in general pricing due to commodity super cycle has also played an important part,” the Topline report read. The increase in pricing and depreciation of PKR/USD by 4.6pc YoY helped mitigate the impact of rising cotton prices, as gross margins remained largely unchanged at 16pc. However, gross profits increased by 9pc YoY.
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4500 to Rs 6300 per 40 kg.
The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg. The Spot Rate remained unchanged at Rs 12200 per maund. The Polyester Fibre was available at Rs 215 per Kg.
Copyright Business Recorder, 2021
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