KARACHI: An alarming drop of 2.9 million bales was seen in cotton production. Total production is expected to be around 4.8 million bales. About 7 million bales of cotton will have to be imported. At present, import contracts of around 5 million bales have been signed. Cotton prices in the domestic and international cotton markets remained stable after fluctuations. Business volume remained very low.
As per speculations of international experts there will be no increase in cotton prices in the cotton season of 2022-2023.
The textile and ginning sector is facing difficulties in importing cotton from abroad because of the high rate of dollar, increase in the rate of New York Cotton and due to the difficulties in opening Letter of Credit for import as well as restrictions in China due to corona pandemic. Due to above mentioned reasons local textile and ginning mills are showing interest in buying local cotton.
In the domestic cotton market, cotton prices remained overall stable during the past week. Textile and Spinning Mills are in dire straits. Some mills are involved in cautious buying as per requirement.
According to textile sector sources, textile mills are running at around 50% capacity. Due to severe recession in cotton yarn and textile products stock is piling up in mills. Ginners are also facing huge loss as they have stock of high quality cotton. The industry is in huge financial crisis. The textile industry, ginners and the people related to cotton business are facing difficulties.
On the other hand, cotton prices are fluctuating in the international cotton markets. The rate of Future Trading of New York cotton market for the month of March after decreasing reached at 79 American cents then jumped at 87 American cents per pound and closed at 82.50 American cents per pound. Similarly, the price of cotton in India after decreasing is in between Rs 63,000 to Rs 69,000 per candy (356 kg).
International cotton experts believe that between the current 2022-23 cotton season there will be recession in cotton demand and prices and it is expected that closing stock of cotton will continue to increase while cotton consumption will remain low due to which there is a little hope of an increase in cotton prices. Textile mills should do business very carefully.
Due to the conflict between Ukraine and Russia, there is a crisis globally and due to the increase in interest rates in the United States and Europe, people prefer to buy mostly food items, due to which the purchase of commodities is very low. Banks are refusing to open L/C due to the strong increase in the value of the dollar, especially in the open market, due to which especially the importers and exporters are disturbed because their goods of worth billions of rupees are struck on the port.
On the other hand, Federal Finance Minister Ishaq Dar has withdrawn from the promise to reduce the value of the dollar to 200 rupees, due to which industrial and retail circles are very much disturbed. Moreover, due to Ishaq Dar’s promise to reduce the value of the dollar, the business and industrial circles reduced the business, which caused irreparable damage to the country.
The rate of cotton in Sindh and in Punjab is in between Rs 14,500 to Rs 17,000 per maund. The rate of Phutti is in between Rs 5,000 to Rs 8,000 per 40 Kg. The rate of cotton in Balochistan is in between Rs 15,000 to Rs 17,000 per maund and the rate of Phutti is in between Rs 6,000 to Rs 8,200 per 40 Kg. Due to extraordinary decrease in the production of cotton in the country the increasing trend in the rate of Banola and Khal continued.
The Spot Rate Committee of the Karachi Cotton Association closed the spot rate at Rs 16,500 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that in the international cotton market bullish trend remained continued. The rate of Future Trading of New York Cotton closed at 82.50 American cents per pound.
According to USDA’s weekly export and sales report, sales for 2022-23 were 16,500 bales. India topped the list by buying 5,700 bales. Indonesia was at second with 4,200 bales. Pakistan bought 3,500 bales and stood third.
12,300 bales were sold for the year 2023-24. Turkey was on the top after purchasing 11,000 bales. Pakistan was second with 13,000 bales.
Seed Cotton (Phutti) equivalent to over 4.2 million or exactly 4,280,500 bales have reached ginning factories across the country till December 1, 2022 registering a decrease of 40.28 percent as compared to the corresponding period of last year.
According to a fortnightly report of the Pakistan Cotton Ginners Association (PCGA) released on Saturday, over 4.1 million or 4,159,041 bales have undergone the ginning process i.e converted into bales.
Cotton arrivals in Punjab were recorded at over 2.5 million or 2,515,167 bales registering a decrease of 31.63 percent as compared to the corresponding period of last year when arrivals were recorded 3,679,016 bales. Sindh generated over 1.7 million or 1,765,333 bales registering decrease of 49.40 percent as compared to the corresponding period of last year when arrivals were recorded 3,479,102 bales.
Textile mills bought 3,568,857 bales while exporters purchased 4900 bales and the Trading Corporation of Pakistan (TCP) didn’t buy during the cotton season 2022-23.
Sanghar district of Sindh topped with cotton arrival figure of 807,529 bales followed by Bahawalnagar district of Punjab with 453,586 bales. Total 404 ginning factories were operational in the country. Exactly 706,743 cotton bales of unsold stock were available in ginning factories.
Naseem Usman, chairman of Karachi Cotton Brokers Forum, while commenting on the report, said that this season, the country will be able to produce barely 4.8 million bales of cotton, thus the country’s textile mills, which are currently running at about 50% capacity. This year the total production of cotton is expected to be around one crore ten lac to twenty lac bales. It is expected that around 6 to 7 million bales will have to be imported from foreign countries. At present, according to the cotton importers, import agreements for about 5 million bales have been made.
Meanwhile, Pakistan Cotton Brokers Association PCBA commented on PCGA’s monthly production report for November and gave useful suggestions to increase cotton production. In the recent past, we had acquired more than 14.7 million bales and gradually we went into decline and decline. We have to decide now that either we should think seriously about becoming a cotton import based country like Bangladesh and Vietnam or make sincere efforts for revival of cotton.
The biggest loser in this whole situation is the PCGA which is extremely weak like other institutions of Pakistan. The institution is unable to save its interest of worth billions of rupees. Cotton seed has the important role in the whole game and our ginners had played an important role in destroying it. Dozens of factories are engaged in making uncertified cotton seed and this mafia is so strong that no one can ask anything from them.
Afghani cotton in our country is available at 5% trash and 8% moisture. Every year the production of Afghani cotton is increasing as well as quality and contamination is also improving. While our quality as well as production is deteriorating. We make poor quality cotton and try to get the same price as American cotton. And that’s why our buyer is focusing more on imported cotton. We have to understand that this is a business and we have to strive to achieve quality.
Copyright Business Recorder, 2022
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