KARACHI: The local cotton market witnessed an overall increase in prices during the past week. Changing weather condition has improved the quality of the crop.
The cotton crop in the fields is in good condition, and the supply of Phutti is expected to increase in the coming days, with a better quality. Cotton production; however, is estimated to be around 65-70 lac bales.
Meanwhile, the textile sector continues to struggle. Many mills and power looms are shutting down in Faisalabad. The industry is unhappy with recent 2% decrease in interest rates. Three new cotton seed varieties have been introduced. Most textile mills are showing interest in importing cotton.
In the international market, New York cotton futures prices rose due to concerns over the impact of Hurricane in cotton producing areas in the United States.
However, local market activity is expected to pick up from October.
In Punjab, the early crop has ended, and the next crop will arrive late but in a better condition. During a recent visit to cotton-producing areas, including Bahawalpur, Sadikabad, Upper Sindh, and Mehrabpur it was observed that the cotton crop is in good condition albeit minor damage in some areas.
However, overall production is expected to improve. Total production is estimated to be around 65-70 lac bales.
As production increases, the supply of cotton seeds will also increase, enabling several closed ginning factories to resume operations. However, the textile sector continues to struggle. According to reports from Faisalabad, known for its textile industry, many textile mills and power looms are shutting down, leading to widespread unemployment. Spinners are particularly affected due to increasing yarn imports, which have impacted local production. The struggle of textile industry is likely to continue unless urgent measures are taken to address the issues faced by this sector.
Meanwhile, major textile mill groups are shifting their focus towards imported cotton, leading to a surge in imports. In contrast, the local market is experiencing a decline in demand and prices for yarn, excluding cotton. This downward trend has precipitated a significant financial crisis in market.
According to reports, several textile groups have billions of rupees stuck in yarn imports, with unusually delayed payments. Despite the State Bank of Pakistan’s (SBP) recent 2% decrease in interest rates, industrialists and traders remain dissatisfied with the move.
In Sindh, cotton prices were in between Rs 17,800 to Rs18,400 per maund. The rate of Phutti is in between Rs 7,000 to Rs8,400 per 40 kg.
In Punjab the rate of cotton was in between Rs 18,600 to RS19,000 per maund. The rate of Phutti is in between Rs 7,200 to TS 9,000 per 40 kg.
In Balochistan, cotton prices were in between Rs 18,000 to Rs18,300 per maund. The rate of Phutti is in between Rs 7,200 to RS8,800 per 40 kg.
The rate of Balochi cotton was in between Rs 19,500 to RS19,600 per 40 kg.
The Karachi Cotton Association’s Spot Rate Committee has fixed the spot rate at Rs 18,500 per maund, following an increase of Rs 200 per maund.
According to Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, international cotton prices remained stable. New York cotton futures traded between 69 and 72 American cents per pound. However, concerns over the impact of Hurricane Fransein on cotton-producing areas in the United States led to an increase in ICE cotton prices.
According to the USDA’s weekly export and sales report, one lac and sixteen thousand bales were sold for the 2024-25 season. Vietnam purchased sixty five thousand and seven hundred bales, followed by Pakistan with twenty seven thousand and five hundred bales. India was on number third with more than thirteen thousand and four hundred bales.
The failure to significantly reduce mark-up rates, coupled with continuous increases in electricity and gas prices, has led to the shutdown of over 100 textile mills in Faisalabad, followed by the closure of more than 1,000 power loom units.
According to Patron-in-Chief of the Pakistan Hosiery Manufacturers and Exporters Association Chaudhry Salamat, “It has become impossible to sustain production operations. Further mill closures will unleash a new wave of unemployment.” Approximately five lac workers in Faisalabad are employed in the power loom sector alone. Power loom owners maintain that escalating production costs and rising raw material prices have made it impossible for them to continue operations.
Chaudhry Salamat said that Ghulam Muhammadabad, the hub of the power loom sector, houses around 2,100 small and large power loom units, of which approximately 1,000 have shut down. He attributed this to Pakistan’s highest mark-up rates and energy tariffs, which have severely impacted the export industry, with most textile mills either partially or completely closed. The effects are now being felt in the power loom sector.
Chaudhry Salamat warned that if the government failed to significantly reduce mark-up rates and lower electricity and gas prices for the export industry, further mill closures will unleash a new wave of unemployment. The current state of the industry suggests that unless the government urgently addresses the textile sector’s issues, the national economy will suffer a severe blow.
Meanwhile, agricultural scientists in Sindh have successfully developed new high-yielding varieties of cotton and wheat. These innovative varieties will enable Sindh to become self-sufficient in cotton and wheat production. This breakthrough was announced during the 36th meeting of the Sindh Seed Council, chaired by Provincial Minister for Agriculture and Supply, Sardar Muhammad Bakhsh Khan Mehar.
The meeting approved the cultivation of 12 new crop varieties, including cotton, wheat, mustard, and Berseem, and outlined the characteristics of the new seeds. According to details, the Sindh government has approved 12 new agricultural varieties, paving the way for enhanced crop yields and improved agricultural productivity.
Copyright Business Recorder, 2024
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