KARACHI: Bullish factor prevailed on the cotton market. The price of quality cotton increased to Rs 23,500 per maund. A significant increase of Rs 25,00 per maund was witnessed in the spot rate, as well. Textile spinners and ginners are not happy due to high prices of cotton and Phutti.
Due to disparity, more textile mills are being closed. Some garment factories and sizing factories have also closed and some are on the verge of closing.
Finance Minister has advised to import cotton from India but the government is to taking such decision. Cotton imports will become more expensive due to further sharp appreciation of the dollar against the Pakistani rupee.
In the local cotton market, unprecedented fluctuations were observed in the price of cotton. Last week, the price decreased by Rs3500-Rs4000 per maund. The spot rate also decreased by Rs 3,000 per maund to a low level of Rs 20,000 per maund. From the beginning of the new week, the increasing trend in the prices was observed, which after continuing reached to Rs 21,500 to 23,500 per maund.
According to market sources, in Punjab since the beginning of Saturday, the supply of Phutti became very limited due to which the price of Phutti as per quality increased to Rs 8,000 to Rs 13,000 per 40 kg.
Apart from this, the price of Future Trading of New York cotton for December delivery after increasing by three American cents reached at 1.06 American cents per pound. In addition, in the local currency market, the US dollar rose again to Rs 230 in the interbank and in open market to a high of Rs 238.
Due to the increase in the price of cotton and Phutti, both the spinners and the ginners were very much worried. The growing disparity amongst cotton, cotton yarn and cotton products refrained ginners from buying expensive cotton.
Due to huge difference in demand and prices of cotton product compared to cotton, the mills have to bear irreparable losses due to which many mills shut down their operations and some other mills reduced production and number of shifts. There is a severe recession in the international markets. The demand for textile products has decreased, significantly. Garment export orders are very low due to which many garment factories and sizing factories are on the verge of closure.
In Sindh province, the price of cotton was Rs 17,000 to Rs 21,500 per maund and the price of Phutti Rs 6,000 to Rs 8,500 per 40 kg.
In Punjab province, the price of cotton was Rs 21,500 to Rs 23,500 per maund; the price of Phutti per 40 kg was Rs 8,000 to Rs 13,000
In Balochistan province, the price of cotton was Rs 18,000 to Rs 19,000 per maund, and the price of Phutti per 40 kg was Rs 8,000 to Rs 11,000.
The spot rate committee of Karachi Cotton Association increased the spot rate by Rs 25,00 per maund and closed it at Rs 22,500 per maund.
Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that there was overall stability in the international cotton markets. Rate of Future Trading of New York cotton for December delivery after reaching at around 1.06 US cents dipped at a low of 1.03 US cents but after that closed at 1.05 US cents.
He said that along with the increase in the arrival of new season cotton in India, the price of cotton is continuing to decline, which has currently dropped by Rs 85,000 per candy. Experts believe that the price of cotton in India after decreasing will reach Rs 60,000 per candy.
Pakistan Textile Exporters Association (PTEA) has asked for immediate lifting of ban on import of Indian cotton as 2.5 million bales of cotton are urgently required for the textile export industry. Delay in cotton import can pose risk to timely deliver the export orders.
In a statement here on Friday, PTEA chairman Sohail Pasha said torrential rains and floods have engulfed Pakistan’s cotton fields, resulting in irreparable loss to the sector. In the province of Punjab, many cotton producing areas have suffered heavy damages due to stormy rains. The cotton crop over 210,000 acres of land has been affected due to the floods. He pointed out that a huge shortfall in cotton production is expected this year as calamitous floods have washed away about half the country’s total crop. Against the annual estimated consumption of minimum 12 million bales; cotton production is expected around 5.5 million bales this year. There is at minimum shortfall of six million bales and this has left with no option but to import raw cotton from other countries. Considering India as the best option for cotton import, he said India is the second largest cotton producer after the US and importing cotton from India would be far cheaper and would reach Pakistan within three to four days.
Moreover, All Pakistan Textile Mills Association condemns the publication of an article by ‘irresponsible actors’ pleading for import of cotton from India.
Meanwhile, though the Punjab government is confident of achieving its revised target of 4.8 million bales of cotton production for the ongoing Kharif season, Sindh’s losses will disturb the overall yield mark of the white gold.
The floods damaged 90 percent of the cotton in Sindh, an official of the Punjab Agriculture Department, who attended Monday’s meeting in Islamabad on crop review told media.
Pakistan’s imports of cotton were US$1.91 billion in 2021, according to the United Nations COMTRADE database on international trade. Experts predict that import bills will rise by 20–30% this year, widening the overall trade deficit.
Cotton production in Pakistan has been declining for more than a decade due to a variety of factors such as bad seeds, competitive crops, and diseases. Its cultivation; however, witnessed a small increase during the last couple of years. The official said cotton production during the current season was expected to reach six million bales, almost half of the country’s demand.
The Federal Committee on Agriculture (FCA) has fixed the cotton production target at 11 million bales. Punjab was about to contribute 6.6 million bales and the remaining portion was expected from Sindh, with a negligible share from Khyber Pakhtunkhwa and Balochistan.
Punjab later revised the target to 4.8 million bales due to low cultivation, also disturbing the overall yield mark.
The official said Sindh’s maximum share was expected to be one million bales while Punjab’s was likely to hit five million bales, depending on future weather conditions.
Intermittent and torrential rains coupled with river floods damaged cotton on over 210,000 acres in six districts of southern Punjab, particularly in DG Khan Division.
Separately, Punjab Agriculture Minister Syed Hussain Jahania Gardezi presided over a meeting on “cotton review” and hoped the province would achieve the target despite flood losses.
He stated that the floods damaged cotton crops on 6% of the land in Punjab but that the target would be met because the crop was grown on 16% more land this season as compared to the last year.
The participants were informed that the cotton crop was bearing abundant fruit again after the rains. As September and October are important for crop growth, the minister issued instructions to the field teams to deliver the cotton advisory to every farmer and get it implemented accordingly.
He also directed the relevant institutions to take steps to ensure the availability of quality cotton seeds for the next season. He said that the biological laboratories were being upgraded for the biological control of harmful insects to the crops.
South Punjab Agriculture Secretary Saqib Ali Ateel, who attended the meeting, said that he expected a cotton yield of 5.5 million bales, up from the revised target of 4.88 million bales. Early cultivation was responsible for the 29 percent increase in yield, he said.
Moreover, Multan was expected to produce 145.64 percent more cotton bales than expected, according to the agriculture secretary. He also said that farmers were directly harmed by the 6% losses, which totalled Rs33,356 million in cash.
Copyright Business Recorder, 2022
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