Firm trend on cotton market

LAHORE: The local cotton market on Tuesday remained steady and the trading volume remained low.

The official Spot Rate maintained the overnight level at Rs 19900 per maund. Polyester Fibre was available at Rs 263 per kg.

Cotton Analyst Nasseem Usman while talking to Business Recorder said that price of Punjab’s Phutti attracted per 40 kilograms prices from Rs 7000 to Rs 8600. Cotton of Sindh was traded from Rs 15500 to Rs 20,000 per maund, Punjab’s cotton was traded from Rs 16500 to Rs 20,000 per maund. He told that 327 bales of Haroonabad were sold at Rs 17250 per maund and 1200 bales of Lodhran were sold at Rs 20,000 per maund.

Principally approving the formation of the Pakistan Cotton Authority (PCA), Prime Minister Imran Khan called for effective legislation to protect farmers’ rights. PCA’s formation was principally approved to “ensure the provision of quality seed, monitoring and enhancing the yield”.

According to Prime Minister Office, PM Khan presided over a meeting on the agriculture sector and discussed enhancing the cotton yield.

He said the government was providing a subsidy on modern agricultural equipment, quality seed and fertiliser. “The benefits of subsidy must be extended to the farmers through the Kissan Card scheme,” the prime minister was quoted as saying.

Regarding fresh legislation, he said it should be made in coordination with all stakeholders to protect farmers’ rights. During the meeting, approval was also given to form an inter-ministerial committee to provide quality cotton seed and approve the promulgation of new laws to protect farmers’ rights. The participants were told that a stock of 4.7 million tonnes of wheat was available in the country and both the federal and provincial governments were providing a subsidy worth Rs15.5 billion. PM says benefits of subsidy must be extended to farmers

It was told that a farmers’ forum had been created under Federal Food Security Minister Syed Fakhar Imam to ensure the representation of farmers in policymaking and for early resolution of their issues.

The prime minister also approved a proposal to hold the National Cotton Conference and directed the Ministry of Industries to prepare a feasibility report on the establishment of plants for indigenous production of diammonium phosphate, the world’s most widely used phosphorus fertiliser.

Federal ministers Shaukat Tarin, Syed Fakhar Imam, Commerce Adviser Abdul Razak Dawood, Punjab Agriculture Minister Syed Hussain Jahanian and senior officers also attended the meeting.

Meanwhile, Ministry of Commerce has prepared a revised draft of Textile and Apparel Policy 2020-25 that would be considered by the Economic Coordination Committee (ECC) on Wednesday (tomorrow), well informed sources told Business Recorder.

“There was a dispute between Commerce Ministry and Energy Ministry on the wording of a decision, which will be altered by the ECC,” the sources added.

On January 12, 2022, Secretary Commerce Sualeh Ahmed Faruqui testified before a National Assembly panel that the issue of gas prices for the textile and apparel sectors, assumed in the policy including Captive Power Plants (CPPs), is yet to be resolved.

According to Commerce Ministry, it re-submitted summary on Textile and Apparel Policy 2020-25 for consideration of the ECC on October 11, 2021. The decision of the ECC was as follows: “The ECC considered the summary of Commerce Ministry on Textile and Apparel Policy 2020-25 and constituted a Committee under chairmanship of Advisor to Prime Minister on Commerce and Investment, Secretary Commerce, Secretary Power, Secretary Petroleum, Secretary Finance and Chairman FBR to deliberate on the policy in a holistic manner and submit viable recommendations to the ECC within two weeks for consideration. The committee may co-opt any member as may be required.”

In pursuance of the decision, the Committee held several meetings and recommended a few changes that have been incorporated by the Commerce Division in the revised draft of the Policy.

Ministry of Commerce has undertaken an exercise of thorough consultations with the private sector stakeholders and proposed to set an export target of $ 20 billion for textile and apparel industry during FY 2021-22 and the target has also been approved by the Prime Minister. The export target for FY 2021-22 is further cascaded till 2024-25 with a projection to double textile and apparel exports to $ 40 billion. However, strong resolve and long-term commitments from Federal Government, robust implementation of policy interventions by relevant Ministries/ Divisions/ Departments and full fiscal support from the Finance Division would necessarily be required to keep intact the due support on proposed interventions throughout the policy years to achieve the set milestones.

According to the first draft, it was proposed that electricity will be provided at Cents 9/ kWh all-inclusive and RLNG at $ 6.5/ MMBTU all-inclusive for the FY 2021-22 and concessionary regime will be continued at regional competitive energy rates for five years after deliberation with the stakeholders.

However, after consultation, the policy was altered with the following: “supply of energy (electricity and RLNG) to export oriented units/ sectors of textile industry at regionally competitive rates throughout the policy years without any disparity among provinces.”

Naseem also told that since Indian cotton rate are higher then world market indian Spining and garment industry will be not able to compete with world markets. Indian mills lost cheap rate cotton advantage due to cotton rate gone up while Indian Yarn mills are making good profit but demand of yarn is very sluggish

Moreover, ICE cotton futures fell nearly 1% on Monday as investors rolled over their positions from the front-month contract, while the focus turned to a closely watched federal monthly supply and demand report later this week.

The front-month contract on ICE futures for March was down 1.20 cents, or about 1%, at 125.54 cents per lb by 12:08 EST. It traded within a range of 125.41 and 126.94 cents a lb.

Total futures market volume fell by 15,768 to 31,504 lots. Data showed total open interest gained 1,391 to 266,056 contracts in the previous session.

Copyright Business Recorder, 2022