Weekly Cotton Review: Panic buying pushes cotton rate to one of the highest levels

KARACHI: The rate of cotton increased by Rs 300 per maund and reached at the highest level of Rs 14300 per maund. The rate of Balochistan Phutti reached at Rs 7200 which is highest in the history. It is hinted that 100 new textile mills will be established in Punjab. Cotton crop in many areas is attacked by white fly and pink ball worm. The month of September may be difficult for the cotton crop. Up till now agreements for the import of one million bales have been signed.

The bullish trend was witnessed in the cotton market during the last week due to the panic buying by the textile and spinning mills. The rate of cotton after increasing by Rs 200 to Rs 300 per maund reached at Rs 14300 per maund while the rate of Balochi cotton reached at Rs 14500 per maund which is highest in last eleven years. In the same way the rate of Phutti reached at Rs 7200 per 40 kg which is highest in the history of Pakistan. The rate of Phutti reached at the highest level in some areas of Balochistan which including Khuzdar.

The reason behind unprecedented increase in the prices of cotton is that US dollar value has been continuously increasing. Another reason behind the increase in the rate of cotton is delay in arrival of imported cotton, as well as, significant decrease in the production of local cotton.

On the other hand, there is a trend of increase in the prices of cotton yarn. Up till now the rate of cotton is manageable for the spinning mills but their margin of profit is deceased. According to the sources of textile spinners, the bullish trend will not continue for long. The government should take corrective measures. However, the cotton farmers are happy because they are getting good price of Phutti.

According to the sources this year cotton production will increase which according to private experts will be eighty five Lac bales while Minister for National Food Security and Research Syed Fakhir Imam cotton says the production will be of one Crore bales. As per information, the position of cotton crop is satisfactory excluding some areas.

Multan Central Cotton Research Institute has evolved a strategy for controlling the attack of white fly and pink ball worm.

Last year the month of September was difficult for the cotton crop. This year, September may be not difficult for cotton crop because of rains and floods but because of the attack of the white flies and pink ball worm.

During the last season the rate of cotton was in between Rs 8000 to Rs 8500 per maund while the rate of Phutti Rs4500 per 40 kg.

During the current season the rate of cotton is in between Rs 13750 to Rs 14300 per maund. In this way textile mills are paying Rs 5500 to Rs 6000 more and in the same way ginners have to pay Rs 1000 to Rs 1500 more as compared to the last year. Although, farmers are getting good price of Phutti after increasing in out put. It is expected that if the farmers will get a benefit then in the next season they will be inclined towards growing more cotton.

Textile mills are facing difficulties in giving payments because of the high rates; however, they are getting good rates of cotton yarn and textile products.

There is delay in payments due to delay in export shipment due to which the financial position of some mills is going to be weak.

Sources in the textile sector say that export orders for foreign countries are being received in a large number but due to the difficulty in determining the price of international and local cotton and the value of the dollar, many exporters are uncertain.

The rate of cotton in Sindh is in between Rs 13750 to Rs 14300 per maund. The rate of Phutti is in between Rs 5800 to Rs 6300 per 40 Kg. The rate of Banola is in between Rs 1750 to Rs 1900 per maund.

The rate of cotton in Punjab is in between Rs 13900 to Rs 14300 per maund. The rate of Balochi cotton is Rs 14500 per maund. The rate of Phutti is in between Rs 5800 to Rs 6300 per 40 Kg. The rate of Banola is in between Rs 1750 to Rs 1900 per maund. The rate of cotton in Balochistan is in between Rs 13900 to Rs 14000 per maund. The rate of Phutti after increasing from Rs 6200 to Rs 6900 per 40 Kg reached at Rs 7200 per 40 kg which is highest in the history of Pakistan. The Phutti of Balochistan is of good quality which sometimes is sold at Rs 500 to 700 more than the price of ordinary Phutti.

The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 250 per maund at closed it at Rs 14050 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that after fluctuation in the rate of cotton in international market bullish trend prevails in the market. There is a slight decrease witnessed in exports as compared to last week according to the USDA weekly export report. Increasing trend in the prices of cotton witnessed in Brazil, Central Asian States, Australia and China but in India the rate of cotton decreased by Rs 300 per candy (356 kg) due to partial arrival of new Phutti crop.

Meanwhile, Federal Minister for National Food Security and Research Syed Fakhar Imam said cotton cluster villages will be introduced to promote the crop by ensuring modern technology in the near future.

Addressing a press conference at the Central Cotton Research Institute (CCRI), he said that cotton was a highly profit-generating crop as it strengthened the country's economy and also offered job opportunities to millions of people. He pointed out that one million bales helped to generate Rs97.5 billion, adding that the government had set a target of 10 million bales for the ongoing season.

He remarked that cotton cluster villages comprising two to four union councils would be introduced in different areas. Modern farming techniques would be introduced in these cluster villages with an objective to motivate other farmers. Besides this, the government is paying keen attention to white gold (cotton) and hopefully cotton would become a strategic crop in the future, he stated. Pakistan used to export textile products worth over $15 billion annually. Last year, the country had to import 4.5 million bales of cotton for the local industry.

The minister said that the government was striving to enhance cotton production. "Special focus is on seed quality, enhancing sowing area, mechanisation and upgrading the research institutes." About the current prices of cotton, the minister noted that the government had introduced an intervention price of Rs5,000 per 40 kg in order to facilitate the farmers. He, however, added that prices of cotton were also high in the international market. Imam advised the farmers to ensure clean picking of cotton so that they could fetch handsome prices for their produce.

To a question about the factors behind the decline in cotton output, he stated that climate change and pest attacks were the main causes for the decline in production, adding that present condition of the crop was satisfactory. He said that the government would also promote quality seeds having immense resistance against climate change and pest attacks.

He said that ginning factories would be convinced to modernise their units as per international standards. To a question about wheat, he said that the government was importing wheat to maintain large stocks. He also announced that the issues faced by scientists would be resolved.

Moreover, the last week of August has started and it is the time when crop is in the final stage and the month of September is considered to be most important month for the cotton crop. We can say that now this is a test case for us because the cotton crop has entered in to the most critical stage. At this point, our slightest negligence can turn all our efforts upside down. In the months of August and September we can get about 80% of our production.

According to the report of Central Cotton Research Institute there are chances of attack of pink ball worm in the different districts of Punjab including Khanewal, Multan, Mian Channu, Bahawalpur, Mailsi, Lodhran, Vehari, Muzzafargarh, DG Khan and Rajanpur.

Regarding Sindh, according to the report of Central Cotton Research Institute Sakrand pink ball Worm has attacked different districts of Sindh including Matiari, Hyderabad, Tando Allah Yar, Mirpurkhas, Umerkot, Badin, Tando Muhammad Khan and Thatta. In the same way according to agriculture extension department Sindh there is a severe attack of pink ball worm in the areas of Nawabshah, Shahdadpur and Sanghar.

However, Patron-in-Chief All Pakistan Textile Mills Association (Aptma) Gohar Ejaz has said after the provision of competitive energy rates by the PTI government, the textile sector is ready to establish 100 more textile mills in Punjab that will create three million new jobs.

The garments and home textile sectors have urged the federal government to allow a duty-free import of cotton and its yarn from India, Uzbekistan and Turkey through land routes since local market has run out of the input commodities.

In a letter, also made available to Business Recorder on Friday, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has sought help from Abdul Razak Dawood, Adviser to the Prime Minister for the struggling apparel textile exporters.

Subject of the letter says that the PHMA wants permission for the duty-free import of cotton and its yarn from India, Uzbekistan and Turkey through roads and railways.

"Cotton yarn prices have been increased by approximately 40 percent to 70 percent (for different yarn counts 20/s, 30/s etc) and even on this exorbitant price cotton yarn is not available," according to the letter undersigned by Chief Coordinator, PHMA Muhammad Javed Bilwani. The available cotton yarn is of a substandard quality that has further forced the exporters to hold up signing fresh deals for global markets, the letter says.

"The situation has also compelled the exporters not to take further new orders and for the reason such export orders meant for Pakistan shall be diverted to other regional countries," it adds.

Copyright Business Recorder, 2021