Cotton market fully in grip of lack of interest

LAHORE: The market remained dull on Tuesday. 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 21,000 per maund.

He also told that new cotton season for the year 2022-23 has partialy started. New Phutti from cotton areas of lower Sindh has started reaching in cotton ginning factories. One truck of Phutti reached at Burawala cotton ginning factory and one truck of phutti reached at Tando Adam ginning factory while two ginning factories of Sangher open gates for purchase of Phutti.

He told that rate of dollar has reached at Rs 200 in the open market. Banks are not entertaining importers due to shortage of dollars. Reimbursements to suppliers are being delayed. This may lead to overseas suppliers to stop accepting LCs from Pakistani banks. Industries may run out of raw materials, markets will face shortage of some essential commodities and fuel shortages. Some drastic measures are needed to prevent the default. The present set up looks unable to take difficult decisions. Biggest loser in the game is PML-N and they may have to opt for elections sooner than later. One year is a far fetched idea. Behind the scene negotiations are going on.

The rate of new cotton crop from different areas of Sindh which includes cotton bales of Degre were sold at Rs 8500 to 9500 per maund, cotton bales of Tando Bhago were sold in between Rs 9000-9500 per maund, bales of Kadan and Badin were sold at Rs 9000-9500 per maund, cotton bales of Mirpur Sakharo were sold at Rs 8500-8600 per maund, bales of Gharo were sold at Rs 8500 – 8600 per maund and bales of Kunari were sold in between Rs 8500-9000 per maund.

Power Division has reportedly decided to discontinue subsidy to five export-oriented sectors beyond May 31, 2022 if Commerce Ministry does not arrange additional amount of Rs 32 billion for the remaining months of current fiscal year, sources close to Secretary Commerce told Business Recorder.

Sharing the details, the sources said, on August 31, 2021 Ministry of Commerce (Textile Wing) wrote a letter to Power Division wherein ECC of the Cabinet decision of August 16, 2021 was communicated on summary titled “continuation of concessional rates of electricity and RLNG to export-oriented sectors for implementation.”

The ECC took the following decisions: (i) electricity may be provided at US cents 9 per kWh all-inclusive to export-oriented sectors namely textiles including jute, leather, carpet, surgical, and sports goods during financial year 2021-22; and (ii) Finance Division may give financial commitment that additional funds if required by Power Division and Petroleum Division shall be provided to continue concessional energy rates to export-oriented sectors. However, Ministry of Energy may apprise relevant Ministries regarding the budgetary situation in time so that Commerce Division may place a summary for supplementary grant allocation before ECC for consideration.

According to the sources, Power Division has apprised that the Subsidy Cell of Power Division has conveyed that Rs. 24.948 billion has already been disbursed to the zero-rated industrial consumers till Feb- 2022 claims against the budgetary allocation of an amount of Rs 26 billon; whereas K-Electric’s zero-rated industrial subsidy claims amounting to Rs 4.61 billion are still under the verification process. Further, owing to the increase in the industrial tariff besides the number of zero-rated industrial consumers, the Subsidy Cell has received Rs. 7.26 billion zero-rated subsidy claims for the month of March 2022, which are also under a verification process.

Indian cotton arrivals slow down apparently in 2021/22 season. According to AGM, by May 7, 2022, cumulative arrivals have reached 4.1618 million tons in 2021/22 season, down 903.4kt or 17.8% from prior 2-year average. Besides, the buoyant demand for cotton in local market also leads to the continual higher cotton prices. Indian cotton prices have hit Rs. 100,000 per Candy, to be one of the most expensive cotton in the world.

The Spot Rate remained unchanged at Rs 21000 per maund. The Polyester Fiber was available at Rs 295 per kg.

Copyright Business Recorder, 2022