Despite the high price of Dollar the prices of cotton remained stable. Uncertainty prevailed in market due to imposition of sales tax. Industrial and trading sectors are protesting. Senate Committee is two steps ahead of Federal Agriculture Commission in setting the target of cotton production. Government advised not to set the hypothetical targets, but set targets based on ground reality.
Due to cautious buying of textile and spinning mills during the last week the market remained stable. The trading volume remained low. The prices of cotton don't increase despite historic high prices of dollar as a result of which government imposed sales tax on cotton and textile products. The partial arrival of cotton of new season of 2019-20 has been started from the other lower Sindh. After the starting of arrival of Phutti the ginning has started in half a dozen ginning factories.
The Phutti of new season is available at the price of Rs 3900 to Rs 4000 per 40 kg while the price of cotton is RS 8700 to Rs 8750 per maund. The ginners had the stock of three lac bales. The price of stocked cotton bale is Rs 7500 to Rs 8900 per maund. The Spot Rate Committee of Karachi Cotton Association has stabled the rate of cotton at Rs 8800 per maund.
According to the estimates of Pakistan Cotton Ginners Association the production of cotton in the country till May 1 will be 1 crore 8 lac bales which is less than seven percent as compared to last year. While FAC has set the target of production of 1 crore 50 lac bales for the year 2019-20 and the Senate Committee has set the target of 1 crore 52 lac bales from 3.28 million hectares.
Chairman Karachi Cotton Brokers Forum Naseem Usman said that FAC had set the target of production of 1 crore 50 lac bales without conducting the survey according to the vision of Prime Minister Imran Khan. According to the ground realities there are very rare chances of achieving the target of production. Although it is premature to say anything because in the last season 2018-19 FAC has set the target of achieving 1 crore 43 lac bales from 2.955 million hectares which is 7,301,805 acres while the FAC for the new season 2019-20 has set the target of achieving 1 crore 50 lac bales from 2.895 million hectares which is equal to 7,153,545 acres and is less then the last year allocated area.
Although during the last year due to severe shortage of water cotton was sowed on only 2.432 million hectares which is 6009472 acres. While according to the information received from Director General Agriculture (Extension) Provincial Crop Reporting the sowing of this season till June 1 is completed on 2.441 million hectares which is 6031711 acres and the sowing is going on.
FAC had set the target of production of 1 crore 50 lac bales from 2.895 million hectares for the year 2019-20 in the month of April. While during the Senate session held last Thursday the Senate Standing Committee on National Food Security and Research told that government has set the target of production of 15.02 million bales from 3.28 million hectares. According to experts that weather National Food Security and Research has conducted a new survey or set the target like FAC on hypothesis while sitting in air conditioned rooms.
Although it looks like that these estimates don't match the ground realities. However, the reports from lower areas of Sindh gave satisfactory reports of cotton sowing. The problem is in Punjab where the reports of cotton sowing are not satisfactory.
The agriculture experts show their interest in real estimation of cotton production and other crops. The estimates of cotton production were wrong for the last many years due to which uncertainty prevails among all stake holders and take wrong steps.
During the current season the earlier estimate was the production of 1 crore 48 lac bales but only 1 crore 8 lac bales were produced. During the current season despite low production ginners had the stock of three lac bales which they are not selling on reasonable rates.
Naseem Usman said that government had imposed 10 percent sales tax on cotton and 17 percent sales tax on cotton yarn. While the government had taken back the incentives given to five zero rated export oriented Industry and impose 17 percent sales tax on them which includes textile sector also. The exporters were agitating against governments anti industry actions and they are giving strike call also due to which uncertainty is increasing. The exports are not increasing despite high prices of dollar because international buyers demand discount.
During the current week fluctuation was seen in the prices of cotton in international market. According to the report of USDA the export of American cotton remained 59 percent low as compared to last year export. The price of New York Cotton is already low due to which the price remains the same. According to the report of Cotton Association of India as compared to initial estimates of production of 3 crore 65 lac bales only 3 crore 10 to 15 lac bales will be produced which is 45 lac less then the initial estimate that's why India is importing a handsome amount of cotton from USA.
While the intensity of trade conflict between USA and China is increasing due to which mixed trend was seen in the market. Due to imposition of 10 to 17 percent of sales tax the export sector witnessed uncertainty. Businesses are on the verge of collapse and trade and industrial sector is protesting.
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