KARACHI: The cotton market is experiencing a downturn due to the recent rains. The spot rate is decreased by Rs 200 per maund. Business activities are limited due to the rainy season. There are concerns regarding the crop yield, as import contracts for cotton are increasing. Markets are facing a severe financial crisis and payment issues are also escalating.
Vice President of Pakistan Central Cotton Committee Dr Yusuf Zafar has said that they will provide cotton farmers with higher yields. However, former Commerce Minister Gohar Ejaz has said that audit of all Independent Power Producers (IPPs will be conducted. Chairman Cotton Ginners Forum Ehsan-ul-Haq said that there is a fear of a record decline in the overall national production of cotton.
The local cotton market experienced a mixed trend in prices during the past week.
In the first two days of the week, prices rose as textile and spinning mills showed more interest in buying.
Cotton prices in Sindh province are in between Rs 17,600 to 18,000 per maund. In Punjab province, the rate of cotton is in between Rs 18,200 to Rs 18,600 per maund. However, due to the rainy season, crop and quality issues, mills became cautious in their buying from Wednesday evening onwards, leading to a decrease in cotton prices. Later, the prices of cotton after decreasing in Sindh were in between Rs 16,800-17,000 per maund In Punjab the rate of cotton after decreasing was in between Rs 17,700-18,000 per maund. Another reason for the decline was the drop in international cotton prices, with New York cotton futures falling to a lower level of 67-68 US cents per pound.
Large mills have increased import contracts from New York cotton, putting pressure on local cotton and causing prices to decline. The Karachi Cotton Association’s Spot Rate Committee had previously raised the spot rate to Rs18,000 per maund, but it has now taken a U-turn and reduced it to Rs17,400 per maund. Meanwhile, the price of polyester fibre was also decreased by 10 rupees per kilogram and reached to a low level of Rs 365 per kilogram.
According to textile mill sources, continuous appeals are being made to the government to reduce energy costs, revise IPPs’ contracts, lower interest rates, and decrease taxes, but it is not taking any effective action. The textile sector claims that due to sluggish demand the prices of cotton yarn and textile products in both local and international markets are down, and businesses are experiencing a slowdown, resulting in an unbearable financial crisis. They claimed that mills are being closed down or operating partially, day by day.
Furthermore, economic crises and uncertain political situations are prevailing both locally and globally. The escalating tensions between Russia, Ukraine, Iran, and Israel, as well as, the deteriorating situation in Europe and America, are causing unrest, which is affecting businesses.
The Karachi Cotton Association’s Spot Rate Committee has reduced the spot rate by 200 rupees per maund, closing it at 17,400 rupees per maund.
According to Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, the international cotton market is experiencing an overall decline. The price of New York cotton futures is around 67-68 US cents per pound. According to the USDA’s weekly export and sales report, over 9,43,000 bales were sold.
For the 2024-25 season, China topped the list by purchasing more than six lac and three thousand bales, followed by Pakistan with 372000 bales, and Vietnam with one lac and eleven thousand bales.
For the 2025-26 seasons 11,500 bales were sold. Mexico led the list with 4,700 bales, followed by Costa Rica with 3,500 bales, and El Salvador with 2,000 bales.
However, former caretaker Minister of Commerce Gohar Ejaz has stated that IPPs (Independent Power Producers) were established at higher costs, and there was over-invoicing in them. He claimed that false statements were made about oil consumption and the use of expensive fuel by the IPPS.
Ejaz said that IPPs receive capacity payments even by keeping their plants closed, and their backers defend the collection of Rs 2.1 trillion in capacity charges. He argued that the IPPs’ friends are citing the affected investment as a reason. No investment is exempt from scrutiny anywhere, he said.
Ejaz emphasised that a forensic audit of IPPs should be conducted, as it is not just the matter of investment for 40 families but it is the matter of life and death for Pakistan’s 240 million people. He said the Power Sector Task Force has been assigned to review the IPPs contract matter. He added that a petition has been filed in the Supreme Court for the forensic audit of IPPs. He said that Pakistan’s friends should unite against the illogical capacity charges of IPPs.
Moreover, the Task Force, headed by Minister of Energy Awais Leghari has completed the framework, according to which the announcement to terminate the agreements made with IPPs in the 1990s is expected soon. The agreements with other IPP companies are also being reviewed. Additionally, the policy of keeping consumers with over 201 units in the same slab for six months has been changed. Special slabs will be created for consumers with over 201 units. For consumers with more than 201 units, a slab of Rs 26 per unit is being considered.
Separately, at the first meeting for the cotton varieties evaluation committee (VEC) held at the Central Cotton Research Institute in Multan, Dr Yusuf Zafar, Vice President of the Pakistan Central Cotton Committee, stated that their primary goal is to provide cotton growers with disease-free and high-yielding seeds. The meeting reviewed 22 different cotton varieties and ensured that the proposed varieties met the standards set by the Punjab and Sindh Seed Councils before final approval.
Dr Zafar mentioned that the VEC will hold meetings regularly to ensure the transparent and impartial distribution of seeds. The meeting involved breeders, agricultural scientists, researchers and university experts. They focused on essential criteria for seed approval, such as the National Biosafety Committee, DNA fingerprinting, and biochemical tests. Additionally, programs for farmers’ training and awareness of modern agricultural techniques were proposed.
However, a significant decline in cotton production in Sindh has raised concerns among farmers and the entire cotton sector. As of July 31, cotton production in Sindh has decreased by 47%, leading to fears of a record drop in the country’s overall cotton yield.
According to Cotton Ginners Forum Chairman Ehsanul Haq, this decline is largely due to the widespread use of various new, substandard, and uncertified cotton seeds by many farmers in Sindh instead of the certified seeds.
This issue is particularly noticeable in major cotton zones such as Sanghar, Badin, Mirpurkhas, Hyderabad, and Umerkot, where last year’s early cotton planting resulted in an exceptional yield of 4.114 million bales, exceeding the target of 4 million bales by 119%.
However, this year, the use of uncertified seeds has led to a significant drop in Sindh’s cotton output, potentially impacting the overall production. He said other contributing factors to the decline in Sindh’s cotton production could include reduced planting areas and adverse weather conditions.
Over the past few years, Punjab’s cotton crop has consistently fallen short of targets due to various reasons, while Sindh’s production, especially from February/ March plantings, had been strong, ensuring a steady supply of cotton to textile mills throughout the year.
Haq urged the federal government to reduce the required germination rate for “basic” and “pre-basic” seeds produced by government agricultural institutions from 80% to 70%, as unfavourable weather conditions have significantly affected seed germination. “This reduction would help address the challenges seed companies face in producing certified seeds, ultimately improving per-acre cotton yield and strengthening the country’s agricultural economy.”
The germination rate is the percentage of seeds that successfully sprout and develop into seedlings under optimal conditions. It is a key indicator of seed quality and viability. A high germination rate indicates good quality seeds that are likely to produce healthy plants, while a low germination rate suggests that a significant portion of the seeds may not sprout or grow properly. “Basic” and “pre-basic” seeds refer to different stages in the seed certification process, which ensures the genetic purity, quality, and health of seeds used for planting. These terms are part of a controlled system used to maintain and multiply seeds with high genetic and physical quality.
Copyright Business Recorder, 2024
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