KARACHI: Rate of cotton remained stable in local market but no trading activities were seen. However a bearish trend prevailed in international cotton markets.
Traders and industrialists expressed concern over hefty 2.5 percent increase in interest rates by State Bank of Pakistan (SBP), saying that in the current scenario the rise in interest rates would bring another storm of inflation.
It is expected that cotton crop may be affected due to the shortage of water and it looks that textile export target may not be achieved.
In the local cotton market during the last week there was no trading activity. Textile and spinning mills were not involved in buying of cotton. Rate of cotton remained stable while no any stock of cotton was remained with ginners.
There was no trading activity in the country due to political uncertainty. Due to the increasing rate of the US dollar the input price is increasing. Although, exporters of textile products are getting good rates but the rates of imported cotton are also increasing. In order to control the increasing rate of the US dollar, State Bank of Pakistan announced its monetary policy before time and increased the interest rate by 2.50 points. Traders and businesses community had already been protesting against high rate of the US dollar and now they are protesting against the higher interest rates.
Fluctuation was seen in international cotton markets, especially in the rate of Future Trading of New York Cotton Market where the rate at one point reached at the highest level of 144 to 145 American cents per pound. After that the rate was in between 135 to 138 American cents; however, the rate after decreasing closed at 132.40 American cents. The use of polyester is increasing in Pakistan and India due to massive increase in the rate of cotton. The demand of cotton yarn has decreased due to increase in rate.
Expressing deep concern over the sharp rise in the value of the US dollar, chairman of the Pakistan Yarn Merchants Association (PYMA) Saqib Naseem and the association’s vice chairman for the Sindh-Balochistan region Muhammad Junaid Teli have requested State Bank of Pakistan’s (SBP) Governor Reza Baqir to adopt effective strategies for stabilising the value of Pakistani rupee. They also demanded that government should abolish import duty on yarn.
The sowing of cotton in the country for the next season has already started. It is expected that cultivation of cotton will increase but the farmers are showing their concerns on the non-availability of water, saying that in these circumstances it is difficult to achieve the production target. In this situation, the relevant organisations should be cautious.
The rate of cotton in Sindh and Punjab is in between Rs 18000 to Rs 21000 per maund while the rates of Banola, Oil and Khal remain stable. The Spot Rate Committee of the Karachi Cotton Association kept the rate of cotton stable at Rs 20,500 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that in international cotton market the rate of cotton remained stable. The Rate of Future Trading of New York Cotton remained in between 135 American cents and 138 American cents but after decreasing it closed at 132.40 American cents. As per weekly sales and export reports of USDA more than sixty two thousand bales of 2021-23 were sold which is seventy three percent less as compared to last week. Vietnam was on top with more than forty two thousand bales. China was on number two with around one thousand and six hundred bales while South Korea was on number third with nine hundred bales. Sixty four thousand and four hundred bales of cotton of 2022-23 were sold. Turkey was on number one with more than twenty six thousand bales; Guatemala was on number two with more than eleven thousand bales while Mexico was on number three more than ten thousand bales. Exports were recorded at four lac and fifty thousand and five hundred bales which is thirty eight percent more as compared to last week. It is expected that exports of India, Brazil and Bangladesh will decrease.
Pakistan’s exports of textile products increased by 21 per cent Y-o-Y to $1.65 billion in March 2022 as compared to $1.36 billion in March 2021, informed All Pakistan Textile Mills Association (APTMA). Strong demand in the West before the summer season gave a huge boost to Pakistan’s textile exports during the period while other factors like resumption of economic activities led to a shortage of various retail brands, competitive utilities and borrowing rates.
On a sequential basis, Pakistan’s textile exports dropped by 2.3 per cent M-o-M, compared to $1.69 billion in February 2022. Cumulatively, textile exports surged by 26 per cent Y-o-Y to $14.26 billion in 9MFY22 compared to $11.36billion in 9MFY21.
Moreover, during the current financial year it is expected that textile exports sector may not achieve its exports target of 21 billion US dollars. During the last five months textile exports went declined by around 40 Crore dollars per month. This decline was mainly due to lack of proper gas and electricity supply to textile sector.
Amid massive electricity load-shedding up to 10 hours a day across the country, the government on Thursday stopped gas supply to CNG stations and reduced it by 50 per cent to the captive power plants (CPPs) of the export industry to increase the gas supply to power plants.
“Yes, we have taken this action to increase the gas supply to the power sector for increase in electricity generation,” a senior official at the Energy Ministry confirmed.
Copyright Business Recorder, 2022
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