Weekly Cotton Review: Spot rate increased after signs of improvement emerge

KARACHI: Signs of improvement were seen in the local cotton market during previous week. Karachi Cotton Association has increased the spot rate by Rs 300 per maund. However, the rate of cotton remained stable in international cotton market.

All Pakistan Textile Mills Association (APTMA) has given suggestions for devising a strategy for improvement in the production of cotton for the new season. It will be better if APTMA takes Pakistan Central Cotton Committee and Pakistan Cotton Standards Institute on board while devising a strategy for the next cotton crop.

It is necessary that relevant government agencies should evolve a positive strategy for increasing the cotton production.

A bullish trend in the local cotton market was witnessed after many days. Some improvement was observed in the cotton market after textile and spinning mills starting buying.

The reason behind improvement is that the containers of imported cotton were stuck at ports due to the scarcity of dollars, while the stock of cotton in the local market is decreasing day by day. The other reason is the flight of dollar.

The government of China is relaxing Covid restrictions. There is energy crisis in Europe but it is hoped that situation will improve after the recent statement of Russian President.

On the other hand, slow purchases of textile products in the European Union and the United States are expected to start after two years. There are reports of some import orders. Due to these reasons, the demand for textile products may increase to some extent.

It is expected that some improvement may be seen in the market at start of the year 2023. The political and industrial situation in the country is not so good. However, if it improves, the business can also improve, but at present it looks a bit difficult. The politicians of the country should think seriously in the national interest in this difficult situation.

There is an improvement of Rs 500 to Rs 1000 in the rate of cotton in Sindh and Punjab. The rate of cotton in Sindh and Punjab is in between Rs 14,500 to Rs 17,500 per maund.

The rate of Phutti in Sindh and Punjab is in between Rs 4,500 to Rs 8,500 per 40 kg.

Banola and Khal prices are increasing due to low crop. Business has slowed down in Punjab province due to heavy fog.

The spot rate committee of Karachi Cotton Association increased the spot rate by Rs 300 per maund and closed the spot rate at Rs 17,000 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman said that there was an overall improvement in the international cotton market.

Last week, APTMA decided to formulate a policy, perhaps for the first time, to come up with some plan of action to deal with the alarmingly low production of cotton in the country.

For this, they can take practical steps by visiting the relevant government institutions. They can take measures to encourage cotton farmers and give them representatives on board by forming their committees. It is necessary to work practically on the initiative of Task Force. First of all, emphasis should be given on Cotton Zones and there should be complete ban on cultivation of other commodities especially sugarcane in these zones. APTMA, itself, should acquire agricultural land and try to grow more cotton.

Meanwhile, the main reason for this year’s situation is the devastating monsoon floods that damaged large areas of farming. Pakistan is the fifth largest producer of cotton, globally, but to meet the demand of its textile sector, the country will need to import at least 6 mullion bales in the current fiscal year.

Farmers in Pakistan face disasters like severe droughts and floods. Sugar mills have been set up in cotton growing areas. Sugarcane has proved a better alternative for farmers who were fed up with the inability to protect cotton against pink bollworm and other pests, but this reward should not be acceptable at the cost of losing the losing textile exports.

The country’s fields are populated by biotech cotton, originally developed for moderate climates with low pest resistance. However, this biotech cotton seed is not appropriate for subtropical climates such as Pakistan and India.

Copyright Business Recorder, 2023