Weekly Cotton Review: Bullish trend continues after fluctuations in rate of cotton

KARACHI: After unusual fluctuations in the rate of cotton, bullish trend continued in the market. There is turmoil in the cotton market. Textile sector is worried. Ginners were surprised on over selling.

Uncertainty prevails among brokers. Up till now the position of cotton crop is satisfactory. Government should review export policy of textile cotton yarn. The Rate of Promise (Waday Ka Bhao) of New York reached at the highest level in seven years.

In the local cotton market during the last week overall bullish trend remained continued after fluctuation. There is turmoil in the market. Ginners were surprised after over selling. Due to the panic buying by the cotton and textile sector at the start of the week the rate of cotton increased by Rs 200 to Rs 300 per maund.

The rate of cotton in international cotton market especially the Rate of Promise (Waday Ka Bhao) of New York Cotton after increasing crossed 93 American cent per pound but on Wednesday evening after correction in the New York Cotton and under its influence correction started in local cotton market. The rate of cotton in Sindh after decreasing was in between Rs 13,400 to Rs, 13500 per maund. Earlier after increasing, rate was at Rs 13,600 to Rs 13,650 per maund. The rate of cotton in Punjab was in between Rs 13,800 to Rs 13,900 per maund but later it was decreased by Rs 200 per maund.

The market shows downward trend due to Muharram Ul Haram and Independence Day holidays in the coming week. During the last week there is a panic among ginners due to fluctuation in the market as a result of which they sold cotton on low rates while the rate of Phutti also increased and the supply was reduced. There were two reasons of fluctuation in the market during the last week one increase in the rate of dollar and the other reason is delay in the delivery of cotton imported by textile mills.

Market sources that in the coming week due to Independence Day and Muharram Ul Haram holidays there will be some trading in cotton market till Friday but the trading activity will fully resume from next Monday. There is a forecast of rains in coming days. Satisfactory rains will be beneficial for the crop. On the other hand information is receiving from some areas that Pink Ball Worm has attacked the crop but the over all position of cotton crop is satisfactory.

The rate of cotton in Sindh is in between Rs 13400 to 13650 per maund. The rate of Phutti is in between Rs 5500 to Rs 6100 per 40 kg. The rate of Banola is in between Rs 1,750 to Rs 1,850 per maund. The rate of cotton in Punjab is in between Rs 13,600 to Rs 13,800 per maund. The rate of Phutti is in between Rs 5500 to Rs 6100 per 40 Kg. The rate of Banola is in between Rs 1700 to Rs 1900 per maund. The rate of cotton in Balochistan is in between Rs 13,450 to Rs 13,500 per maund. The rate of Phutti is in between Rs 5,900 to Rs 6,300 per 40 Kg. The rate of Banola is in between Rs 1,700 to Rs 1,900 per maund.

The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 13,500 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all mixed trend was seen in international cotton market. As per USDA weekly report the exports increased as compared to last week and World Agricultural Supply and Demand Estimates (WASDE) report shows increase in demand of cotton in America as compared to production due to which Rate of Promise (Waday Ka Bhao) of New York Cotton witnessed a significant increase of 93.70 American cent per pound and under the influence of which the rate of cotton in other countries had positive impact.

In Brazil, the cotton crop has been damaged, leading to an increase in the price of cotton. The rate of cotton remained stable in China and Central Asia. In India bearish trend was witnessed because of the partial arrival of Phutti. In India the rate of cotton decreased by Rs 800 per candy (356) per kg. According to the experts rate of cotton remained stable in international cotton market.

Chairman of National Business Group Pakistan and President Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain has said the government should assign some areas for cotton growing only to boost the cotton economy as farmers are switching to other crops. The demand by the growers to increase cotton intervention price should also be reviewed, he said.

Mian Zahid Hussain said that cotton growers were switching to sugarcane and other crops for years therefore the government should lure them towards cotton through benefits and slap a ban on cultivation of any other crop in areas allotted for cotton. He said that many growers have also switched to rice and now they are preferring hybrid rice over any other crop as its per acre output is almost three times higher than basmati and it fetches almost double money. Now the area under cultivation of rice has increased from 4.7 million acres to 5.5 million acres while it requires three months to ripe. He informed that per acre yield of Basmati is almost 35 to 40 maund while the output of hybrid rice is around 150 maund. Planters get Rs 70,000 to Rs 80,000 for planting Basmati on an acre but the hybrid rice fetches them Rs 140,000 to Rs 160,000. For this reason, the area under cultivation of Basmati in Punjab has reduced by 15 percent and its exports have reduced from $800 million to $650 million.

Meanwhile, National Assembly Standing Committee on Commerce has directed the ministries of commerce and food security to revisit the country's livestock export policy. A meeting of the committee presided over by MNA Syed Naveed Qamar on Wednesday expressed displeasure over contradictory arguments for a ban on the export of livestock. The committee directed the ministries to revisit the policy in consultation with all the stakeholders and present its report in the next meeting.

It appointed a sub-committee to examine the issues relating to the imports of cotton, growth of textile exports, including sales tax on cotton exporters, duties on import of yarn cotton and cotton seed and submit its report to the committee within 30 days.

Adviser to the Prime Minister on Commerce Abdul Razak Dawood and Commerce Secretary Sualeh Ahmad Faruqui briefed the committee on the status of treaties, agreements, protocols and conventions with other countries and international agencies on trade and commerce.

The commerce secretary informed the committee that the proposed amendment for increase in the tenure of chambers and other organisations is under consideration with the ministry of law and justice and it will be tabled before the committee in its next meeting.

Copyright Business Recorder, 2021