KARACHI: In a recent development, cotton production in Pakistan has surged to 83 lac and fifty thousand bales, inching closer to an estimated total of 84 lac and fifty thousand bales. Despite this growth, concerns are still there about stable rates amid limited business activity.
The government’s decision to hike electricity prices instead of offering energy incentives has sparked discontent among industrialists, particularly in the textile sector.
The anticipated rise in gas prices has further fuelled this unrest, leading to protests by industrialists and the All Pakistan Textile Mills Association (APTMA).
A potential strike strategy is being mulled over in response to the adverse policies affecting the industry. Additionally, the ban on cotton yarn imports from Dubai is expected to constrain business activities in the coming week, compounded by extended holidays.
In the local cotton market, the price of cotton can be deemed relatively stable due to cautious buying by textile and spinning mills. However, the price has increased by about Rs. 500 due to low-quality cotton. Day by day, needy mills are purchasing according to their requirements, leading to a reduction in business volume.
Textile mills are waiting for the government to reduce the tariff from 14 cents to 9 cents. However, they are expecting an increase in gas prices on the instructions of the IMF. NEPRA is preparing to increase the price of electricity. Even if the government reduces the tariff, sources believe that the government will facilitate with one hand and takes back with the other hand as the situation remains the same.
Contrarily, the government increased the price of energy instead of giving incentives to industries, including the textile sector. Industrialists and APTMA are protesting over this policy.
The textile sector has long been demanding from the government for a level playing field by implementing differential tariffs for regional competitors, but the relevant institutions are not listening to them.
As a result, foreign importers are slipping away from our grasp, severely impacting exports. The aspirations of boosting exports remain merely a dream as few days are left of the interim government.
In the meantime, they have fulfilled many promises and are currently strategising for the next five years to enhance the economy under Special Investment Facilitation Council. Only time will reveal the outcome following the national and provincial assembly elections.
However, business activities will be restricted next week due to extended holidays.
The rate of cotton in Punjab is in between Rs 19,000 to Rs 21,500 per maund. The rate of Phutti is in between Rs 8,000 to Rs 9,300 per 40 kg. Phutti is not available in Sindh and Balochistan. The rate of Banola, Khal and oil is stable.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 3,00 per maund and closed it at Rs 20,000 per maund.
Naseem Usman, chairman of the Karachi Cotton Brokers Forum, stated that there is overall stability in the price of cotton in the international market. New York cotton futures prices are also currently at 85 to 86 US cents per pound, which has influenced stability in the price of cotton in other markets, as well.
The Cotton Association of India (CCI) has stated that cotton production has declined from four Crore and five lac bales to two Crore ninety five lac bales in the current season. Textile sector in India is improving. They have appealed to the government to eliminate the 11% import duty on cotton imports.
According to the USDA’s weekly export and sales report, 349,400 bales were sold for the year 2023-24. China topped the list by purchasing 133,200 bales, followed by Vietnam with 82,800 bales. Pakistan bought 68,900 bales, securing the third position.
Reports from the Pakistan Cotton Ginners Association (PCGA) revealed that over 8.3 million bales of seed cotton (Phutti) had been delivered to ginning factories nationwide as of January 31. Of these, approximately 8,308,790 bales had been processed into cotton bales.
Punjab contributed over 4.2 million bales, while Sindh’s share stood at over 4.1 million bales. The textile sector purchased the majority of the bales, with exporters acquiring a smaller portion. Notably, the Trading Corporation of Pakistan (TCP) refrained from purchasing during the current cotton season.
Sanghar district in Sindh recorded the highest cotton arrival figure, followed by Bahawalnagar district in Punjab. A total of 151 ginning factories were operational across the country, with approximately 372,710 cotton bales of unsold stock in these facilities.
Naseem Usman, chairman of the Karachi Cotton Brokers Forum, commenting on the report, stated that ginners only have a stock of 372,000 bales, with the quality of cotton being less than half of that.
The trend of continuous increase in international cotton prices, especially New York cotton, which has risen to a high level of 86-87 US cents per pound, has prompted major groups of textile mills to purchase cotton to meet their needs. The USDA’s weekly cotton exports and sales report is also very positive.
According to private analysts and some sources, this year’s total cotton production in the country is expected to be around one Crore bales. Apart from 84 Lakh 50 thousand bales, 10 to 12 Lakh bales are unregistered, and about 5 Lakh bales have been damaged by whitefly. Given the circumstances, it is speculated that the price of cotton may rise further in future.
Copyright Business Recorder, 2024
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