Lacklustre business activity on cotton market

LAHORE: The local cotton market on Saturday remained steady while the trading volume remained low.

Cotton Analyst Naseem Usman told that the rate of cotton in Punjab and Sindh is in between Rs 18000 to Rs 20,000 per maund. 1350 bales of cotton of Khairpur were sold at Rs 21100 per maund.

The cotton crop would be cultivated over 2.5333 million hectares of land during current Kharif season (2022-23) across the potential areas of the country to produce about 11.034 million bales for fulfilling the domestic demand for industrial raw material as well as for exporting.

The crop to be grown over 1.8211 million hectares of land in the Punjab province as cotton production targets in the province during current season were fixed at 6.600 million bales, said an official in the Ministry of National Food Security and Research. Talking to media here on Friday, he said that cotton production targets for Sindh Province were fixed at 4 million bales by bringing about 0.4600 million hectares under crop cultivation, whereas crop output targets for Khyber Pakhtunkhwa and Balochistan were fixed at 0.004 million bales and 0.430 million bales respectively by cultivating the crop over 0.0022 million hectares and 0.0700 million hectares.

Meanwhile, he said that the federal ministry in collaboration with provincial governments and other stakeholders was also working on multi-pronged strategy to bring maximum area under cotton production for achieving sustainable agriculture growth as well as enhancing farms income.

In this regard, he said that the government was also intended to announce the intervention price of the major cash crops before the start of sowing season to encourage the farmers for bringing maxim area under cotton cultivation.

He said that due to high domestic and international cotton prices and the incentives introduced by the government, the area under cotton cultivation in the country was also expected to increase by 20 percent during coming crop sowing season (2022-23). He also said that during last year’s announcement of cotton crop intervention price, local output of crop grew by 2 million bales as compared to the previous year despite 9 percent decrease of the area under crop cultivation.

The other factor that contributed in increasing cotton production was growers’ investment in crop management, who applied adequate fertilizers and pesticides to eradicate the pest attacks, he said, adding that training programmes and workshop would also be organised to maintain the momentum.

In order to enhance per-acre crop output across the country, efforts were made to ensure availability of certified high-yielding seeds, he said, adding that 4 triple gene cotton verities and 7 double gene varieties were also approved by provincial seed councils for commercial cultivation in Pakistan.

The certified seed of approved varieties would be enough to cultivate over 3 million hectare and were available with private seed companies and public sector seed corporations, he said, adding that the Ministry of National Food Security and Research would also organise a national cotton conference which would be attended by all stakeholders including growers and the industry.

He further informed that the ministry has also approved a developmental project to introduce and develop cotton in new areas of Gomal Zam in Khyber Pakhtunkhwa province and Balochistan to expand area horizontally.

He said that efforts were also afoot to bring maximum land under cotton production through capacity building of potential farmers, provision of cotton related machinery and strengthening of cotton research system in these provinces.

Subsidy on cotton seed, white fly specific pesticides and fertilizers was likely to continue during current season as it was provided during last year, he said, adding that the ministry was also working on Cotton Development Authority Act to comprehend the cotton research, grading and standardisation and GMO technology licensing.

Meanwhile, ICE cotton futures eased on Friday, tracking a retreat in wider commodity markets and pressured by a stronger dollar, which countered supply concerns due to drought conditions in key areas.

The first-month contract on ICE futures for May was down 0.36 cent, or 0.3%, at 135.33 cents per lb, at 12:17 EDT.

“They’re (prices) not moving very much... We’re just seeing some position squaring and we’re still being influenced by outside markets. Corn is down, soybeans are down, wheat is down, gold and silver are lower and the dollar’s little higher today,” said Keith Brown, principal at Keith Brown and Co in Georgia.

But for right now, the drought will keep prices aloft a little bit, Brown added.

Making cotton more expensive for other currency holders, the dollar rose on Friday after data showed U.S. job growth continued at a brisk pace in March.

The cotton contract was set for small weekly decline after posting gains in the previous three.

“We had that somewhat uninspiring export sales number yesterday. So old crop didn’t like that and saw some speculators selling. The new crop saw a little higher acres number so that was a little bearish,” Brown noted.

On Thursday, the USDA’s planting intentions report showed US cotton acreage at 12.234 million acres for the 2022/2023 marketing year versus 12.007 million acres forecast in a Reuters poll.

The USDA also released weekly export sales data which showed net sales of 234,000 running bales of cotton for 2021/2022, down 24% from the previous week.

In grains, Chicago soybeans hit a one-month low after USDA’s forecast of record U.S. soy acreage pressured the market.

Oil dipped in and out of negative territory, making substitute polyester less expensive.

Total futures market volume fell by 19,351 to 17,458 lots. Data showed total open interest fell 1,538 to 227,162 contracts in the previous session.

The Spot Rate remained unchanged at Rs 20,500 per maund. Polyester Fiber was available at Rs 288 per kg.

Copyright Business Recorder, 2022