COTTON REVIEW: prices decrease by Rs200 per maund

The prices of cotton decreased by Rs 200 per maund. 60 lac bales will be imported due to the unprecedented decrease in the production of cotton. Import duty on cotton should be abolished. All Pakistan Textile Mills Association (APTMA) demanded that government should take steps on war footings to increase the production of cotton.

According to Karachi Cotton Association the rate of cotton is expected to increase in international market amid hopes of decreasing trade conflict between China and America.

In the local cotton market during the last week cautious buying was witnessed by the textile and spinning sector. On the other hand due to increase in the supply of Phutti and due to the interest of ginners in buying of cotton the rate of cotton over all decreased by Rs 100 to Rs 200 per maund. However, the rate of quality cotton was not under pressure but except two days trading volume was low.

In Sindh the rate of cotton is in between Rs 7,800 to Rs 9500 per maund while the rate of Phutti was in between Rs 3200 to Rs 4350. In Punjab the rate of cotton was in between Rs 8700 to Rs 9600 while the rate of Phutti remained between Rs 3600 to Rs 4700 per 40 Kg. The increasing trend in the prices of Khal, Banola and eatable oil was witnessed in Sindh and Punjab. In Balochistan the rate of cotton was in between Rs 8800 to Rs 9450 while the rate of Phuttti was in between Rs 4200 to Rs 4800 per 40 kg.

The Spot Rate Committee of KCA has decreased the rate of cotton by Rs 100 per maund and closed it at Rs 9300 per maund.

Chairman Karachi Cotton Brokers Naseem Usman said this year cotton production was low due to the untimely rains, extreme hot weather and due to the attack of different viruses and worms. In many areas cotton crop was attacked by Locusts due to which the cotton production as well as quality was badly effected. The government had set the target of production of one crore 50 lac bales but the Cotton Crop Assessment Committee has decreased the target by 48 lac bales and set the target of production of Rs One crore 2 lac bales.

According to private experts 90 lac bales of cotton will be produced.

According to the estimates of Pakistan Cotton Ginners Association 61 lac bales are produced till November 1 this year as compared to the production of 77 lac bales during last year which is 16 lac bales almost 20 percent less.

According to the experts it is expected that till the end of last year season One crore 7 lac bales were produced while up till now 61 lac bales were produced and if more 30 lac bales will be produced like previous year then 90 lac bales will be produced.

This year due to the exceptionally low production of cotton 50 lac to 60 lac bales of worth one billion 60 crore dollar will be imported.

According to the information up till now agreements for the import of 29 lac bales had been signed while textile and spinning mills are signing more agreements.

Chairman APTMA Dr Amanullah Kassim Machiyara and Chairman KCA Khawja Muhammad Zubair during a joint press conference few days back complained that the amount of Rs 80 billion to Rs 90 billion was stuck in Federal Board of Revenue (FBR). They said that Sales Tax Bonds issued to exporters were not accepted by any bank nor they were cashed. Interestingly, there was no guarantee of government on issued bonds to exporters.

In this situation due to nonpayment of refunds and worse financial crunch APTMA has threatened to stop the payment of sales tax of current month.

During the press conference Amanullah Kassim and other leaders said the government was not releasing Rs 90 billion of refund of exporters. He also said that this year cotton production was exceptionally low. 60 lac bales of cotton will be imported from abroad in order to fulfill the demand of local industry. Moreover, they requested to abolish import duty on cotton.

Chairman KCA Khawja Muhammad Zubair demanded that government should take notice of the exceptionally low production of cotton and should take steps on war footings to increase the production of cotton. He said they had given many suggestions to increase the production of cotton. Moreover, he also demanded the abolition of import duty on cotton to full fill the demand of local textile sector.

Furthermore, due to the threat of APTMA that they were unable to pay sales tax this month due to the nonpayment of the sales tax refund amount FBR officials talk to APTMA delegation on Thursday for the solution of the problem.

Chairman APTMA told Naseem Usman FBR officials had assured them to release the amount of Sales Tax Refund to exporters in two to four days. Fluctuation was witnessed in the Waday Ka Bhao (Rate of Promise) of New York Cotton.

According to the weekly report of USDA during the last week increase of 52 percent was witnessed in exports while the level of trade conflict between China and America is also decreasing despite this the Waday Ka Bhao (Rate of Promise) of New York Cotton was not increased as expected. According to the report Pakistan is the biggest importer of American cotton. While matter of satisfaction is that China signed import agreements with America while Indonesia cancelled import agreements of 65,000 bales.

Chairman Cotton Association of India Atul S Ganatra has hinted that cotton production in India for the year 2019-20 will be satisfactory. The bearish trend continued in Indian cotton market while the rate of cotton remained stable in China. According to the local textile spinners the price of cotton like good Pakistani cotton was Rs 500 to Rs 600 less but local mills don't have any choice except they buy local cotton. Due to the increase in the prices of cotton increase in the prices of cotton yarn and textile products was also witnessed however difficulties are faced due to financial crunch.