Weekly Cotton Review: Prices stable on cotton market amid low business volumes

KARACHI: There was stability in cotton prices, though business volume was quite low. New crop advance deals have already started with signed contracts for 40 trucks.

However, Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Mubashir Nasir Butt has demanded the introduction of a separate ‘apparel policy’.

The textile sector has been continuously urging the government to resolve its energy issue, but the government is not paying attention. Resultantly, the industry is feared to be closed down.

Recently, a Member of the Provincial Assembly of Punjab, Rana Muhammad Salim, in his speech in the House lauded Pakistan Central Cotton Committee’s research work and strongly advocated for securing funds for these institutions.

Sajid Mahmood Head of the Transfer of Technology Department at CCRI Multan has said that cotton is the lifeline of the country’s economy. If the financial difficulties of the research institutes are removed, Pakistan can produce 18 million bales of cotton annually.

During the past week, the price of cotton remained stable in the local cotton market, while business activities significantly decreased due to the month of Ramadan. Textile spinners are also not taking interest in buying. There is hardly any transaction taking place now. Ginners also have a limited stock of cotton available, as the cotton season is coming to an end.

The advanced deals of new crop of cotton have already started. Contracts for approximately 30 to 40 trucks have been signed for Phutti of advanced deals. The rate of Phutti which started this week from Rs 10,000 to 11,000 per 40 kg dropped to Rs 9,500.

Burewala’s factory has finalised an advanced deal of 200 bales of cotton at a price of Rs. 22,500 per maund. The ginners of Chichawatni, Sanghar and Tando Adam have finalised deals of Phutti, but so far no one has received information about selling cotton in advance from any cotton factory.

On the other hand, the textile sector consistently complains about the significant increase in energy prices, but the government is not taking any positive steps. Instead of reducing energy prices, the government is reportedly considering implementing a proposal to increase electricity by 5 rupees per unit and gas by 147 percent due to the demand of the International Monetary Fund (IMF).

The industrialists have expressed concern that if the energy tariff continues to increase in the same way and the government remains silent, it will be impossible for them to run their industries.

Former Minister of Production, SM Tanveer, in an interview, said that so far there are reports that 35% industrial units have already been closed.

On the other hand, according to reports, the meeting of technical committee of cotton intervention price review committee 2024-25 for setting the intervention price for cotton was chaired by Akmal Siddiqui.

The rate of cotton in Sindh and Punjab is in between Rs 20,000 to Rs 22,000 per maund. Phutti which is available in very limited amount is in between Rs 9,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola and oil is stable.

The Spot Rate Committee of the Karachi Cotton Association has kept the rate of cotton unchanged at Rs 21,500 per maund.

Nasim Usman, the chairperson of the Karachi Cotton Brokers Forum, has said that there has been an overall decline in international cotton prices, causing the price of New York cotton futures to drop to 91 American cents.

According to the weekly export and sales report from the USDA, a total of 81,900 bales were sold for the year 2023. Turkiye remained at the top by purchasing 20,500 bales. China followed closely behind, purchasing 13,409 bales, securing the second position. Indonesia purchased 12,100 bales, placing third.

For the year 2024, a total of 72,209 bales were sold. Bangladesh led the purchases with 18,500 bales, securing the top position. Turkiye followed with 17,600 bales, remaining in the second position. Honduras purchased 11,400 bales, securing the third position.

The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) is exerting pressure for a review of the textile policy, demanding the government to introduce a separate five-year “Apparel Policy” for the garments sector, separating it from textiles.

This call comes in light of the upcoming expiring of the GSP Plus status and the forthcoming report of the United States International Trade Commission (ITC) on the competitiveness of Pakistan’s apparel industry, expected at the end of August this year.

Mubashir Nasir Butt, the central chairman of PRGMEA, appreciated the government’s swift response to the competition in Pakistan’s textile industry, as reported by the USITC.

He emphasised the significance of this initiative, stating that it provides a valuable opportunity to enhance the industry’s exports. Highlighting the importance of the sector, Butt stressed the need to strengthen it and provide it with a separate identity.

He advocated for the implementation of a new and liberal apparel policy aligned with the textile policy for the next five years. He urged for the establishment of a federal-level Apparel Council to address industry challenges and stabilize textile exports.

Meanwhile, Sajid Mahmood, Head of the Transfer of Technology Department at CCRI Multan, discussed with cotton analyst Naseem Usman on boosting cotton production per acre to meet the textile industries’ raw cotton requirements. He stressed the immediate need to unfreeze and allocate funds for research institutes affiliated with the Pakistan Central Cotton Committee (PCCC).

He highlighted that research institutes worldwide don’t encounter issues like delayed salary payments or inadequate research funds, which impede progress. Notably, PCCC-affiliated cotton research institutes in the four provinces are currently facing severe financial and administrative crises, exacerbated by the non-payment of cotton cess by over 70 percent of major textile groups for years. Urgent action is needed to resolve these issues and rescue Pakistan’s largest research institute.

Despite these challenges, the cotton variety Cyto 547, developed by the Central Cotton Research Institute Multan, outperformed all public and private institutions in Punjab in the 2023 National Coordinated Varietal Trial (NCVT). This success underscores the expertise of cotton specialists in research institutes.

However, financial constraints remain the primary obstacle. Overcoming these hurdles could potentially boost annual cotton production to 18 million bales.

Recently, member of the Provincial Assembly of Punjab Rana Muhammad Salim’s speech in the Punjab Assembly, emphasizing cotton’s significance for the country’s economic stability, has received widespread praise. He lauded PCCC’s cotton research work and strongly advocated for securing funds for these institutions.

Copyright Business Recorder, 2024