Prices firm amid lacklustre activity on cotton market

LAHORE: The market remained dull on Monday. The trading volume remained low.

Cotton Analyst Naseem Usman told that fluctuation was observed in international cotton market. He also told that the rate of cotton in Punjab and Sindh is in between Rs 18000 to Rs 21,000 per maund.

Cotton planting in many parts of Sindh has been lagging as the province faces a record-breaking heat wave and severe water shortages, raising concerns about the performance of the country’s textile economy.

“Shortage of irrigation water and an unusually hot summer are likely to hit the cotton crop in season,” a stakeholder told The News on Saturday.

“Overall, Sindh is experiencing water shortage with the exception of some areas in the lower part of the province and it is feared that the sowing cotton would be next to impossible for the tail-end growers.”

Digri, Mirpurkhas, Jhu­ddo, Kot Ghulam Moham­mad, Jhilori, Sindhri, Naokot, Phuladiyyoon, and Khaan are the most affected in Sindh province, according to reports pouring in from these parts.

The growers said there were reports that cotton-picking would be delayed this season in the early cotton areas, while water shortage in the upper province has now entered an alarming stage. Similarly, cotton-growing areas in Punjab are also facing drought-like conditions.

According to reports, canals are 80 percent short of water in upper Sindh and lower Punjab, where cotton sowing has been estimated to be delayed by three to four weeks.

Besides, rising mercury was also likely to affect the cotton despite an increase in the area under cultivation, stakeholders said, adding that only timely rains could save the crop from damage this season.

Currently, farmers were seeding cotton crops though the ideal planting time has lapsed because canals were dry.

According to experts, late sowing does not bode well for most of the cotton varieties as it delays flowering, which not only lowers the yield, but also the quality of fibre.

Short season crops are compromised in terms of production, while young plants are too sensitive to high temperatures in early days. Moreover, pre-monsoon and early monsoon rains that usually start from around June 10 can harden the soil for the seeds that have not germinated as yet. Also heavy downpour can flood the fields leaving the saplings submerged.

On the other hand, cotton market that opened on Friday after long eid holidays swung between Rs18,000 and Rs21,500/maund (37.324 kg) during the two-day week as cotton stocks have almost ended in the country. Prices also fluctuated in the international market during the outgoing week. July futures closed at a high level of 155.95 cents per pound in the New York Cotton Market.

According to the weekly cotton export report of the USDA, cotton sales from the 2021-22 crop during the week reached 0.232 million bales, higher by 92 percent than sales of the last week. China remained the largest buyer with 99,700 bales.

The cotton crop of 2022-23 witnessed sales of 93,200 bales, of which Pakistan purchased 19,800 to become the second-biggest buyer after China.

Naseem Usman, Chairman of Karachi Cotton Brokers Association, said the prices of silver fibre increased in other countries including India, where production was expected to be lower than last year. In order to meet the cotton demand, India removed 11 percent cotton import duty till September this year, but prices were still increasing and New Delhi was considering banning exports for a few months

Industry officials said that due to an increase in the cotton futures, especially in the New York Cotton Market, the local mills would have problems in the futures deals. Moreover, a huge increase in the exchange rate might also affect the trade amid Russia-Ukraine conflict.

Traders said cotton prices were expected to rise globally as Bangladesh was planning to import 9 million bales due to an increase in the fabric and yarn demand. Bangladesh had imported 8.5 million bales in 2021.

Khawaja M. Zubair, Chairman, The Karachi Cotton Association has expressed his serious concerns over the acute shortage of Canal Water in many areas of Southern Punjab and Sindh, as reported, resulting in sowing of cotton crop in these areas is badly affected in the eve when the country is facing extreme shortage of cotton since last 03-04 years due to devastating failure of cotton crop. Therefore, the local textile mills are compelled to import raw cotton from abroad to meet their rising requirement of raw material to keep their mills operational.

Khawaja M. Zubair, Chairman, The Karachi Cotton Association, therefore, urges upon the Federal Government, Governments of the Punjab and Sindh to kindly look into this serious problem in the best interest of cotton economy and cotton farmers of the Southern Punjab and Sindh and take all possible measures on war footing basis to ensure supply of adequate/much needed Canal Water to the affected areas of Southern Punjab and Sindh. This would help the Farmers to cultivate Kharif crops especially cotton crop as per schedule.

Coordinator Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Malik Sohail and Member Cotton Committee Malik Tanveer Arshad have demanded of the government that the proposed cotton authority should be set up immediately. The severe shortage of water in the process of cultivation should also be eliminated immediately.

In South Punjab, about 70 percent water shortage is being recorded on Taunsa Canal, Panjnad, Trimun Canal, Bahawal Canal. Markup should be reduced immediately causes obstacle to the industrial development. Considering the prices of cotton and edible oil in the international market, there is a golden opportunity for Pakistan to achieve maximum production of cotton and stabilize the national economy.

In a joint statement, they said that the price of cotton in the New York Cotton Market is 145 cents per pound while the price of cottonseed oil in local market is Rs 15000 per 40kg. Given these conditions, there is a clear possibility that cotton farmers will get more compensation from the upcoming crop than the previous year. They said that last year kappas was sold in Pakistan up to Rs 10,000 per 40kg.

They further said that Pakistan’s economy is linked to agriculture, especially cotton. He said that textiles accounted for 62 percent of Pakistan’s total exports and the former government had proudly announced the export remittance but never declared import in front of the nation. While, meeting with Prime Minister Shahbaz Sharif, Business Council of Pakistan suggested in reduction of import. They said that the balance of export and import is necessary for real development. That is only possible with enhancing production of cotton to reduce import bill.

The Spot Rate remained unchanged at Rs 21000 per maund. The rate of Polyester Fiber was increased by Rs 2 and was available at Rs 292 per kg.

Copyright Business Recorder, 2022