Weekly Cotton Review: Erosion in PKR value one of reasons behind rise in cotton prices

KARACHI: The rate of cotton witnessed an increase of Rs 2,500 per maund. The spot rate increased by Rs1800 per maund. Caretaker Federal Minister for Commerce and Industry Gohar Ejaz said that efforts are being made to revive the industries and textile sector.

Government has assured textile exporters that by September 4, refund of Rs 35 billion will be paid, and closed industries will also be restored in a month.

Patron in Chief Pakistan Textile Exporters Association Khurram Mukhtar termed the month of September as most difficult for the textile industry. Separately, the risk of attack of Pink Ball worm on cotton crop has increased.

At present, the production of the crop is 30 lac bales, which has increased by almost 100% as compared to the last year’s production of cotton till August 31.

In the local cotton market, cotton prices continued to rise during the past week. Textile spinners are buying cotton, especially due to the extremely high dollar rate, while ginners are demanding high rates due to the relatively low supply of cotton and the continued increase in cotton prices, especially due to very low Ginning Out Turn (GOT).

It is expected that rate of the US dollar will further increase and the mills are buying cotton, due to which the price of cotton has increased by Rs 2,000 to Rs 2,500 per maund while the rate of Phutti has reached at the highest level of Rs 9,500 to Rs 10,500 per 40 kg. However, after the sharp rise the rate of cotton started to decrease on Saturday evening.

According to market sources, if the value of the US dollar continues to rise, the upward trend in cotton prices will also continue. There was an increasing trend in the rate of Future Trading of New York Cotton.

According to the information received, the cotton crop is said to be satisfactory at present. However, the arrival is relatively low due to the weather, but it is expected to increase by the middle of September. Some of the cotton growing areas are reported to be affected by attack of pests. Especially, the crop is at risk because of the threat of Pink Ballworm.

The month of September is considered as the most dangerous month for the cotton crop. At present, the production of the crop is 30 lac bales, which has increased by almost 100% as compared to the production of cotton in last August 31.

However, the Federal Minister of Commerce and Industry, Gohar Ijaz, has started efforts to increase the exports of the country. If the strategy developed by him is implemented, then the exports of the country may start to increase, and especially the textile sector may be strengthened.

In Sindh province, the price of cotton is in between Rs 20,500 to Rs. 21,500 per maund with an increase of Rs 2,000 per maund while the rate of Phutti after an increase of Rs 1,000 per 40 kg is in between Rs 9,000 to Rs 10,500. The price of cotton in Punjab is in between Rs 21,500 to 22,000 per maund while the price of Phutti is in between Rs 9,000 to 10,500 per 40 kg.

The price of cotton in Balochistan is in between Rs 20,800 to Rs 21,000 per maund and the price of Phutti is in between Rs 9,300 to Rs 11,000 per 40 kg. Increasing trend was also witnessed in the rate of Khal, Banola and oil. The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 1,800 per maund and closed it at Rs 21,000 per maund.

Naseem Usman, chairman of Karachi Cotton Brokers Forum, has said that the price of cotton in the international cotton market has increased due to the decrease in the cotton harvest in China and the increase in heat intensity in the cotton producing areas of the United States and also due to a storm there. The rate of Future Trading of New York Cotton reached at the highest level of to 89.61 US cents.

According to USDA’s weekly export and sales report, sales for the year 2023-24 were 61,400 bales. Costa Rica topped the list by buying 23,400 bales. Bangladesh was second by buying 10,000 bales. Vietnam bought 7,300 bales and ranked third. Indonesia bought 6,700 bales and ranked fourth. Pakistan bought 6,300 bales and stood at the fifth position. As many as 11,000 bales were sold for the year 2024-25 which were bought by Pakistan.

However, the federal government has assured to activate inactive industries within a month, continue the industrial support package and pay refunds of Rs 35 billion to export industries by September 4 and to achieve the target of 25 billion dollar exports.

These views were expressed by the Patron Chief of Pakistan Textile Exporters Association, Khurram Mukhtar, while talking to media after separate meetings with Federal Minister of Trade and Industry Dr Gohar Ijaz, Federal Minister of Energy, Muhammad Ali and member Inland Revenue Federal Board of Revenue.

Mukhtar told that Dr Gohar Ejaz has set a target to take the exports up to 25 billion dollars by reactivating the closed industry across the country in a month. He said that all the issues including payment of pending refunds of the exporters will be resolved expeditiously.

According to Khurram Mukhtar, Federal Minister of Energy Muhammad Ali has assured to continue the industrial support package for the industry even after October and said that the problems related to the distribution of electricity faced by the export industries will also be solved soon.

He also said that the meeting with the caretaker federal ministers is very encouraging. He hoped that the industry will stand on its two feet again with their efforts. He further said that the exporters will make every possible effort to achieve the target of 25 billion dollar exports.

Meanwhile, Caretaker Federal Minister for Commerce and Industries and Production, Dr Gohar Ejaz on Wednesday, set an ambitious target of $25 billion in textile exports for the current financial year against the $16 billion target for the last fiscal year.

The minister also pledged a swift revival of all closed industries, with a tight deadline of just one month. During a meeting convened with the Pakistan Textile Exporters Association, led by Khurram Mukhtiar, Gohar outlined his vision. The minister assured that each and every industry currently closed for various reasons would see reopening by September 30.

Comparing this year’s projected export figures with the previous year’s $16billion he expressed confidence in surpassing this milestone. He emphasized that all challenges obstructing their operations would be systematically addressed.

Dr Ejaz asserted his willingness to personally engage with all stakeholders, including industrialists. He affirmed his readiness to visit their premises if required, underlining his dedication to revitalising the industrial landscape. The minister requested a comprehensive list of all dormant industries nationwide, along with their specific issues.

The minister also said that the issue of pending funds owed to industries by various departments, including the Federal Board of Revenue (FBR) and customs, would be swiftly resolved.

Furthermore, he extended an open invitation to associations and businessmen, ensuring his availability to collaborate and find resolutions for their problems.

The minister assured that challenges related to gas, electricity, energy, and fund disbursement would be resolved efficiently, reiterating his commitment to fostering a thriving business environment.

Copyright Business Recorder, 2023