Cotton market: Main participants conspicuous by their absence

LAHORE: The market remained dull on Wednesday. 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

Pakistani cotton experts expressed confidence in the development of local cotton-related industry and yarn export to China as well as other parts of the world, which is increasing every year despite the COVID-19 pandemic.

According to the General Administration of Customs of the People’s Republic of China (GACC), data showed that China imported more than $168 million worth of cotton yarn from Pakistan in the first three months of this year. Uncombed single cotton yarn (commodity code 52051200), containing 85% or above, crossed $133 million in the first quarter of 2022.

Data further showed that the export of cotton yarn (commodity code 52051100) from Pakistan to China crossed $33.30 million, while last year in the same period it was $34.06 million. The export of uncombed cabled cotton yarn (commodity code 52053200)to China crossed $1.50 million in the first quarter of 2022.

In the first quarter of 2022, more than 51147.28 tons of cotton yarn were imported from Pakistan. As affected by COVID-19, last year the import of cotton yarn was more in terms of quantity and value.

Dr Tassawar Hussain Malik, Director at Pakistan Central Cotton Committee (PCCC), Ministry of National Food Security and Research told China Economic Net that price is the main reason for cotton yarn export, and both farmers and exporters get a good price advantage from China. He added that Pakistan has top quality cotton because manual picking ensures its quality.

“Last year the approved minimum price was Rs 5500 per 40KG and this year cotton associations suggested Rs 8000 to keep domestic availability because Pakistan’s textile sector is booming and local demands increased,” he stated.

He further said that the germplasm resources of both countries are complementary. Chinese technology and new varieties of seeds could help improve Pakistan’s cotton industry.

Experts believe that cotton plant protection is still a big crisis in cotton production and authorities need to take it seriously while about 20% of the cotton crop/production is lost on a yearly basis. They said that in the last 5 years, the followings are the reasons for damaged cotton crops; PBW: 10-15%, Whitefly: 10-12%, other insects: 5-6%, Cotton leaf curl disease (CLCuD) Disease: 10-15%, Insects Disease complex: 40-45%.

Experts said that last year’s pink bollworm attack was severe and at least 200KG per acre were lost simply because of PBW which was tantamount to around 15 lac bales. They added that streamlining seed trait technologies for insect resistance and strengthening national and provincial plant protection systems are required while back-to-back heavy rainfall spells in 2019 and 2020 created drainage problems in Sindh where around 1 million bales are damaged each year.

They further said Pakistan and China should work together, especially regarding plant protection issues in Pakistan like insect pests and diseases. This year, climate change and extreme heatwaves are affecting the cotton crop, so they should take advantage of China’s cotton and Pakistan’s cotton to create new varieties.

They added that yarn growing could be fruitful if Chinese technologies and seeds are used in Pakistan.

ICE cotton futures were little changed on Tuesday, as expectations of a hit to demand from top consumer China due to COVID lockdowns offset concerns over supply of the natural fiber.

Cotton contracts for July rose 0.19 cent, or 0.13%, at 143.12 cents per lb, at 12:39 p.m. ET (1639 GMT). It traded within a range of 142.1 and 145.22 cents a lb.

“The cotton market is beginning to shift focus away from supply concerns such as adverse weather, over to demand concerns such as China shutting its economy,” said Keith Brown, principal at Keith Brown and Co in Georgia.

The cotton market also seemed to take some cues from fragile sentiment in wider markets, Brown added, amid concerns that aggressive monetary tightening from central banks could throw growth off track. China is one of the biggest consumers of U.S. cotton.

Meanwhile, just as the European textile and apparel market had recovered from the pandemic it was once again hit by the Russia-Ukraine war. However, the market showed great resilience with the volume of apparel imports by the EU-27 countries growing 13 per cent to 1,057 million tons in January 2022.

Textile and apparel imports by EU-27 countries went up 10.2 per cent Y-o-Y from January to February, says a CCF Group report.

Most of the imports were from China, Bangladesh, India, Pakistan, Vietnam and Turkey which together accounted for nearly 80 per cent of total imports. In February, textile and apparel imports by EU-27 were expected to decline due to the Russia-Ukraine war. However, the war did not have much impact. On the contrary imports from Bangladesh and India have grown rapidly since the second half of last year.

Last year, apparel imports by the EU-27 countries from China declined due to the shift in part of demand to nearer markets. At the same time, imports from Turkey, Bangladesh, India and Pakistan increased significantly with sanctions on Xinjiang cotton causing this shift. Cotton exporters from Uzbekistan, India and Vietnam have been supplying more cotton yarn to Bangladesh, South Korea and European markets since last year.

The processors in these countries accept higher yarn prices than China due to the tariffs and downstream processing costs. The epidemic continues to impact global textile and apparel despite EU relaxing its epidemic prevention policy and production and consumption in the region normalizing.

The Spot Rate remained unchanged at Rs 21000 per maund. Polyester Fiber was available at Rs 292 per kg.

Copyright Business Recorder, 2022