KARACHI: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Saturday has decreased the spot rate by Rs 100 per maund and closed it at Rs 12200 per maund.
The local cotton market remained stable on Saturday. Market sources said that trading volume was thin as bearish trend witnessed in the cotton markets worldwide.
ICE cotton futures fell to a one-week low on Thursday as a strengthening US dollar and losses in the grains market overshadowed a robust federal export sales report. Cotton contracts for May fell 0.76 cent, or 0.9%, to 85.75 cents per lb at 2:10 p.m. EDT (1810 GMT), having touched its lowest since March 11 at 85.35 cents. It traded within a range of 85.35 and 87.38 cents a lb.
“The sales were very good, especially considering that there is not much cotton available in the US,” said Bailey Thomen, cotton risk management associate with StoneX Group.
However, “the cotton market is following some of the outside markets ... the dollar index is trading higher, it could be adding some pressure on the (cotton) market.”
The US Department of Agriculture’s weekly export sales report showed that net sales of 437,700 running bales (RB) for 2020/2021 were up noticeably from the previous week, while exports of 351,900 RB were unchanged. In the wake of strong export sales data cotton prices jumped as much as 1% earlier in the day before paring all the gains.
Cotton Analyst Naseem Usman told that the federal government is likely to introduce two ordinances which will impose Rs290 billion taxes on the citizens. Under the first ordinance, the government will abolish income tax exemptions given to various sectors.
Sources said that the procedure to introduce a presidential ordinance to abolish the income tax exemption of Rs140 billion has been completed and a summary in this regard has been approved by the federal cabinet.
The officials, privy to the development, said that the summary of the ordinance was approved by the cabinet via circulation, adding that the bill is not being introduced in the parliament due to lack of time.
“The federal government has to inform the International Monetary Fund (IMF) before March 24 about the abolition of income tax exemption,” said the sources.
The other ordinance will focus on the power sector as it is an IMF requirement.
Despite enjoying billions of rupees worth of subsidy on electricity and gas supply, the textile industry has failed to support efforts aimed at collecting cotton cess to promote research work.
The previous government of Pakistan Muslim League Nawaz (PML-N) had made it mandatory for textile manufacturers to pay cotton cess, which was a prerequisite for their registration and eligibility under various subsidy schemes.
However, the criteria were changed after the cotton commissioner was transferred to the Ministry of National Food Security and Research from the Ministry of Textile Industry.
Since then, the food ministry has continued to strive to collect cotton cess and even the textile ministry was requested to cooperate, but to no avail.
The low collection of cotton cess has badly hit research work, which has led to a historic decline in cotton harvest estimated at 7 million bales in the current season.
First, the cotton production fell sharply during the 2013-18 tenure of PML-N government, when the harvest shrank to 9 million bales. Now, the output has come down to 7 million bales - the lowest in several decades.
A major reason behind the decline was no major research in the area of cotton as most of the focus was on the textile sector, which got billions of rupees worth of subsidy, but was reluctant to contribute to research work.
As a result, Pakistan has become a net importer of cotton for the past few years due to poor quality of cotton produced in the country.
Vice President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI) & Senior Vice Chairman Pakistan Yarn Merchants Association (PYMA), Hanif Lakhani and Vice Chairman & convener FPCCI’s Central Standing Committee on yarn trading, Farhan Ashrafi have demanded the government to allow immediate import of cotton yarn from India, so that cheap raw material could be made available to the textile industry and timely delivery of export orders to foreign buyers.
While expressing serious concerns over the delay to ban the export of cotton & cotton yarn, and asked the government an immediate ban on the export of basic raw materials to save the country’s industries from disaster.
Mean While, the federal cabinet on Friday approved the promulgation of an ordinance aimed at preparing a legal path to increase power tariff by a minimum Rs5.65 per unit from now till October to collect a whopping Rs884 billion from consumers.
It was the second emergency summary that the federal cabinet had approved through circulation to save the International Monetary Fund Programme from collapsing again.
Earlier, the cabinet also gave nod to immediately imposing the Rs140 billion worth of additional taxes as part of a host of prior conditions set by the IMF.
The cabinet allowed further amending the Regulation of Generation, Transmission and Distribution of Electric Power Act, commonly known as NEPRA Act, through an ordinance.
The ordinance will give powers to the government to impose a new surcharge equal to 10% of the electricity revenue requirements or Rs1.40 per unit. In addition, the ordinance will give effect to implementing the Circular Debt Management Plan, approved by the cabinet.
Naseem told that 460 bales of Rahim Yar Khan were sold at Rs 12400 per maund.
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 4800 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 Committee of the Karachi Cotton Association on Saturday has decreased the spot rate by Rs 100 per maund and closed it at Rs 12200 per maund. The Polyester Fiber was available at Rs 220 per Kg.
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