Cotton market: Firmness prevails amid modest activity

LAHORE: The local cotton market on Tuesday remained steady and the trading volume was satisfactory. Cotton Analyst Naseem Usman told that the rate of cotton in Sindh is in between Rs 16,500 to Rs 17,500 per maund. The rate of cotton in Punjab is in between Rs 17,500 to Rs 18,500 per maund. The rate of Phutti in Sindh is in between Rs 45,00 to Rs 62,00 per 40 Kg. The rate of Phutti in Punjab is in between Rs 62,00 to Rs 74,00 per 40 Kg.

400 bales of Tando Adam were sold at Rs 17000 to Rs 17200 per maund, 400 bales of Khadro were sold at Rs 16900 to Rs 17000 per maund, 400 bales of Shah Pur Chakar were sold at Rs 17200 per maund, 1200 bales of Chichawatni were sold at Rs 18900 to Rs 19200 per maund, 400 bales of Sahiwal were sold at Rs 19200 per maund, 600 bales of Vehari were sold at Rs 18900 to Rs 19,200 per maund, 200 bales of Jahania were sold at Rs 19,000 per maund, 200 bales of Burewala were sold at Rs 18900 per maund and 200 bales of Haroonabad were sold at Rs 19200 per maund.

The recent monsoon rains will have no negative impact on overall agriculture production of major Kharif crops including cotton, sugarcane, rice and maize but agriculture experts warn if rains continue in to next week it will harm the cotton crop in the country.

A senior official of Ministry of National Food Security and Research (MNFS&R) and an agriculture expert said that the ongoing rains would have positive impact on both high delta Kharif crops including sugarcane, rice and maize and low delta Kharif cotton.

If heavy rains continue in the cotton belt it would have a negative impact on its output as rain causes various diseases in cotton crop. They said that large amount of standing water for more than 24 to 48 hours is not beneficial for the cotton crop.

Dr Khalid Abdullah, Cotton Commissioner, of MNFS&R told Business Recorder that recent rains would not affect cotton crop as currently crop is at its vegetative growth stage but in case rains persist, then it would negatively impact on the cotton crop.

Federal Committee on Agriculture (FCA) during its previous meeting held on April 1, fixed 11 million bales of cotton production target from an area of 2.5 million hectares for year 2022-23.

The meeting also fixed 8.6 million tons production target for rice over an area of 3.1 million hectares. The FCA fixed the production target of sugarcane for year 2022-23 at 78.6 million tons from an area of 1.2 million hectares.

Dr Gohar Ejaz, Patron in Chief, All Pakistan Textile Mills Association (APTMA) indicated, the Pakistan Textile Industry is expecting a notable increase in exports during FY23 with a growth rate above 20 per cent given that the Government continues with the Policy of ‘Regionally Competitive Energy Tariffs’ for exports.

Textile Industry has posted record exports of $4 billion in FY22 with its expansion and investment plans of about $5 billion under LTFF and TERF schemes – YOY growth of 25 percent up till June 30, 2022.

Earlier, APTMA stated that the growth was only possible due to the supply of energy at regionally competitive tariffs. Currently, textile is the only sector that continues to grow and bring foreign exchange to the country, gearing up to close at $20 billion in June 2022 compared to $15.4 billion in June 2021.

In addition, Pakistan Textile Industry plans to import 6 million bales of cotton this year from the US and Brazil. Pakistan’s cotton imports are on the rise again. After importing just 3.1 million bales of 170 kg during the first nine months, over 1.1 million bales made their way through ports of entry during April and May 2022.

In April, APTMA reported that the overall cotton area in this decade has declined by 33 per cent from 2.9 million hectare to 1.9 million hectare. Almost 1.5 million farmers grow cotton out of which 75 per cent is grown in Punjab while the rest is grown in Sindh, while the cotton area in Punjab has decreased by 50 per cent from 2.53 million hectare(2012) to 1.28 million hectare (2022).

Saqib Naseem, Chairman Pakistan Yarn Merchants Association (PYMA) and Muhammad Junaid Teli, Vice Chairman, Sindh & Balochistan region have expressed disappointment that the State Bank of Pakistan was not taking effective measures to stop the continuous increase in the value of the US dollar, saying that the soaring dollar risks SMEs, industries and businesses.

They demanded the State Bank of Pakistan to take concrete steps to stabilize the value of the rupee as businesses and industrial activities were badly affected, especially small & medium enterprises (SMEs) were facing the biggest financial losses. Depreciation of rupee and continuous increase in value of dollar has increased the cost of doing business due to which the business & industrial community is facing severe difficulties.

Meanwhile, ICE cotton futures fell on Monday on demand concerns and economic uncertainty, although losses were capped by gains in the wider grains markets and a softer dollar.

The most-active third-month December contract on ICE Futures fell 0.16 cent, or 0.2%, to 90.73 cents per lb, at 12:21 p.m. ET. It traded within a range of 89.5 and 92.15 cents a lb.

“The weather in Texas in the next two weeks is going to be hot and dry. And yet, China continues to have COVID infection lockdowns, so one kind of offsets the other,” said Keith Brown, principal at cotton broker Keith Brown and Co in Georgia.

The Chinese city of Shenzhen told 100 major companies to set up “closed-loop” systems as it battles COVID-19, according to a document attributed to the local government circulating online on Monday. China is a top buyer of U.S. cotton.

The Spot Rate remained unchanged at Rs 18,000 per maund. The polyester fiber was available at Rs 320 per Kg.

Copyright Business Recorder, 2022