The prices of cotton increased by Rs 300. Crisis like situation in the world prevailed due to the severe America and China trade conflict. The local cotton market also effected due to America and China trade conflict. During the last working day of the week there is a pressure in cotton market.
During the last week the prices of cotton increased by Rs200 to Rs 300 per maund due to increase in buying by the textile and spinning mills. Though the quality of cotton affected by rains after Eidul Azha due to which the mills were interested in cautious buying but soon after the quality of cotton starting improving the mills increased the buying.
The reason behind increasing buying by the mills is the forecast of rains between August 28 and August 30. The rate of cotton was in between Rs 7600 to Rs 7700 per maund but during the last two days of the week rate of cotton increased by Rs 300 per maund and reached at Rs 8000 per maund. In the same way the price of Phutti increased by Rs 200 to Rs 300 per 40 kg and was available at Rs 3400 to Rs 3800 per 40 kg; rates of Banola and Khal also increased by the same ratio.
In Punjab the rate of cotton is in between Rs 8300 to Rs 8400 per maund while the rate of Phutti is in between Rs 3500 to Rs 4100 per 40kg. In Balochistan the rate of cotton is in between Rs 7900 to Rs 8000 per maund while the rate of Phutti is in between Rs 3500 to Rs 3700 per 40 kg.
The Spot Rate Committee of Karachi Cotton Association has increased the rate by Rs 250 per maund and closed it at Rs 8000 per maund.
Chairman Karachi Cotton Brokers Forum told that mills will increase buying with the increase in the improvement of the quality of cotton while there is a possibility of increase in the rate of Phutti due to increase in the supply of Phutti and increased in buying by the mills.
The trade is suspended between India and Pakistan due to Kashmir conflict so there will be no import of cotton, cotton yarn and comber from India. These items were imported from India through DTRE scheme through out the year. The mills have to import these items from other countries. There are chances that buying of local cotton may be increased.
The America and China trade conflict has affected the business of the whole world. This conflict has negative impact on the prices of cotton in international market. The downward trend was witnessed in the rate of New York cotton one of the reason behind this is USDA weekly report according to which there is a decline in the export of cotton as compared to last week.
Indian textile sector was in crisis like Pakistani textile sector as 30 percent mills in India were closed while many mills don't have the money to buy cotton. In India three crore twelve lac (3,12,00,000) bales were produced which is 55 lac bales less as compared to the earlier estimate of three crore sixty five lac (3,65,00,000) bales. Despite that there was low buying and over all there was a bearish trend witnessed in Indian market.
On the other hand due to America and China trade conflict the rate of cotton was not increased in China. According to the information received from China there textile sector was also in crisis. Many textile mills are not running on full capacity. Overall downward trend was seen in the rate of cotton globally.
Slow down was witnessed in local textile sector. On the other hand issue of 10 percent sales tax needs to be addressed. The FBR has imposed 10 percent sales tax on cotton which mills are paying through ginners.
According to chairman Pakistan Cotton Ginners Association Mian Mahmood Ahmad he is talking to chairman FBR Shabbar Zaidi in this regard and he assured him that mills will deposit 10 percent sales tax directly in FBR but there was no official announcement in this regard yet.
Moreover there is not clarity regarding with holding tax due to which there was uncertainty witnessed in the market. APTMA has written FBR to clarify their point on with holding tax.
On the other hand Pakistan Kissan Ittehad has appealed to the government to fulfill their promise with the farmers of announcing support price of cotton but nothing is announced in this regard.
Keeping in mind the current circumstances the price of Phutti should be fixed at Rs 4000 per 40 Kg. According to media reports FBR has imposed 3% Regulatory Duty on the import of cotton. The market was under pressure on the last day of the week.
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