Dullness persists on cotton market

LAHORE: The market remained dull on Friday. 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 ginning season will partially start from June 15.

The chairman of Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) Zubair Motiwala said trade is better than aid and EU can play its vital role in revival of trade between Pakistan and Afghanistan with its support at FATF.

Discussing Pak-Afghan economic and regional dynamics with Thomas Seiler, EU Chargé d’ Affaires, Zubair Motiwala apprised Seiler of current trade landscape and its potential in Pakistan and how it can be extended to Afghanistan via transit trade to EU countries.

They both discussed matters of bilateral interest focusing on Pak-EU trade relationship and mutual support in various areas of social development.

Zubair Motiwala offered his expertise and support to jointly explore trading opportunities and contribute towards economic uplift of the region especially by involving Afghanistan trade potential thereby supporting socio-economic uplift of the region.

He also offered his mediation with Afghan government to meet international human rights conditions for the aid to flow into Afghanistan in areas of education, health and food support programs.

Motiwala established that the biggest issue is third party payments processing by international corresponding and local commercial banks in case of trade with Afghanistan due to being over compliance of Pakistan government as a result of FATF discrimination. He gave examples of Germany, China, CIS, India, and South Korea who are easily trading with Afghanistan and do not face payment issues or sanctions by FATF and other international agencies.

Due to such discrimination Pakistan is forced to trade with CIS via Afghan transit route and reluctance to process third-party payments are giving rise to negative sentiment in Afghanistan; which Pakistan can ill afford as it may result in anarchy and over flow of refugees giving opportunity to illegal immigrants and smuggling.

Motiwala updated Thomas about Barter trade that can be an alternate however due to balance of trade and risk in processing payments, credibility can be an issue that needs to be dealt as focal point.

Motiwala also urged that GSP Plus status which expires on 31st December 2023 shall be extended for 10 years, this program ensures that large number of women is employed in factories and mostly people from low-income background living under poverty line. GSP Plus has provided much needed diversity and inclusion of minority section of society. He offered that PAJCCI delegation can visit Brussels to present Pakistan case at EU to provide real input on how extending GSP Plus will help in society turn around by generating income and engaging masses in positive activities.

Sindh agronomists, private sector, and agricultural academic researchers have stressed the need for more research and attention in agriculture, saying that cotton production is declining due to climate change, water scarcity, and other reasons, and there is a need to check the quality of pure seeds and pesticides.

A mega seminar on “Cotton production technology” was organized under the auspices of Sindh Agriculture University and in collaboration with Department of Agriculture Government of Sindh and Engro Fertilizer Limited.

On the occasion, Dr Fateh Marri, Vice Chancellor, Sindh Agriculture University, said that given current climate change conditions, water scarcity, and other issues, new varieties of pure seeds and agricultural policies need to be improved.

He said that joint research projects with agricultural research institutes and the private sector could be worked out to solve the problems faced by the Agricultural sector of the province, new seed commodities, agriculture, livestock, and other agricultural sectors.

Provincial Secretary of Agriculture Qazi Aijaz Mahesar said that due to climate change, the production of cotton has decreased by 50%, as well as lack of pure seeds and less focus on the cotton crop have had a profound effect on Pakistan’s textile industry.

Progressive Farmer Syed Nadeem Shah said that the further improve the performance of the Sindh Seed Corporation, and pure seeds, there is a need to increase the agricultural research budget in Sindh.

Khusrau Nadir Gilani, Chief Commercial Officer, Engro Fertilizers Limited, said that due to rapid shortage of zinc in children in Pakistan, zinc has been introduced in food crops. He said that Egro Fertilizer has been standing with farmer community of Pakistan for the last 50 years.

Hidayatullah Chhajro, Director General. Agricultural Extension said that the experts of the Extension Department are working on various awareness programs and fieldwork to solve problems in the agricultural sector including seeds, fertilizers, and pesticides.

Central Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), Shahzad Azam Khan, on Thursday warned the PML(N)-led federal government that any “imprudent” decision to discontinue the concessional power tariff for five export-oriented sectors will be disastrous for the country’s economy.

The country’s textile, one of the five sectors, is boosting its exports with prospects of 25 percent this fiscal year, but may see “damaging” effects if the concessional power tariff was ended, he added.

The textile sector topped with $15.4 billion exports in 2020-21 that is now going to surpass $15.98 billion mark in just 10 months of 2021-22, Central Chairman, PHMA, Shahzad Azam Khan said along with Coordinator Jawed Bilwani, Zonal Vice Chairman (North) Kashif Zia, Zonal Vice Chairman (South) Abdul Rehman and members during Executive Committee meeting.

The knitwear textile has also achieved the highest exports growth of $3.8 billion in 2020-21 and grows to $4.2 billion in the first 10 months if 2021-22, up by 35 percent.

The PHMA’s Executive Committee meeting discussed the current economic situation of the country and also passed resolution to make all out efforts to help further augment the value-added textile exports to underpin the country’s ailing economy. But, the PHMA also cautioned the federal government to avoid any “unwise” move, which may derail the growing exports.

It asked the prime minister and his economic team to ensure a level-playing field by providing concessional energy tariffs and Duty Drawback on Local Taxes and Levies as committed in the new five year textile and apparel policy. The federal government should continue supporting the “five export-oriented sectors” for the country’s economic stability, employment creation and revenue generation.

Moreover, ICE cotton futures rose 3% on Thursday, supported by mill buying as the dollar retreated.

Cotton contracts for July rose 3.80 cents, or 2.63%, at 148.27 cents per lb, at 17:06 system time. It traded within a range of 141.12 and 148.86 cents per lb.

“We did see a lot of buying interest around and there was a lot of fixations coming into the market which lent support to the July contract,” said Valentin Olah, cotton risk management consultant at StoneX Group.

“In the near term, it’s all going to be about what the weather does. If we see continued rains the moisture index starts getting off or getting out of deficit, perhaps the market will try to get rid out of that premium it had been collecting on weather.”

The dollar fell across the board , making cotton a more attractive bet for overseas buyers.

Total futures market volume rose by 2,741 to 32,392 lots. Data showed total open interest gained 187 to 202,925 contracts in the previous session.

China cotton futures on the Zhengzhou Commodity Exchange were up 0.4% at 21,275 yuan per tonne. The spread between China futures and U.S. cotton was 138.6 cents as of 05:06 p.m. ET (0906 GMT).

Cotton contracts for July rose 3.80 cents, or 2.63%, at 148.27 cents per lb, at 17:06 system time. It traded within a range of 141.12 and 148.86 cents per lb.

“We did see a lot of buying interest around and there was a lot of fixations coming into the market which lent support to the July contract,” said Valentin Olah, cotton risk management consultant at StoneX Group.

“In the near term, it’s all going to be about what the weather does. If we see continued rains the moisture index starts getting off or getting out of deficit, perhaps the market will try to get rid out of that premium it had been collecting on weather.” The dollar fell across the board, making cotton a more attractive bet for overseas buyers.

The Spot Rate remained unchanged at Rs 21000 per maund. The Polyester Fiber was available at Rs 300 per kg.

Copyright Business Recorder, 2022