WEEKLY COTTON REVIEW: Bearish trend observed due to cautious buying

In the local cotton market during the last week bearish trend was seen due to cautious buying by local mills and due to the panic buying by the ginners because the quality of the cotton stored by the ginners is not good hence spot rate of cotton decreased by Rs 200 per maund. This was the reason that the rate of cotton was not increasing as well as the trading was also decreasing.

Cotton production is expected to be 85 lac bales. 60 lac bales will be imported. Need to build strategy on war footings to increase the production of cotton. Big textile groups had signed the agreements of importing 36 lac bales while new agreements were signed daily. According to All Pakistan Textile Mills Association 60 lac bales of cotton will be imported. Up till now local textile mills buy 60 lac bales from the local cotton market while the ginners had the stock of 14 lac bales. In this way it is estimated that 85 lac bales will be produced in the country.

In Sindhi the rate of cotton is in between Rs 7000 to Rs 9000 per maund while the rate of Phutti is in between Rs 2400 to Rs 4100 per 40 kg. In Punjab the rate of cotton is in between Rs 7100 to Rs 9000 per maund while the rate of Phutti is in between Rs 2800 to Rs 4100 per 40 kg. Though in Balochistan the arrival of Phutti has stopped but the rate of Phutti is in between Rs 7400 to Rs 8700. Due to the less production of cotton and increase the demand of Banola, Banola khal and Banola oil the rates were increased.

The Spot Rate Committee of Karachi Cotton Association has decreased the rate by Rs 200 per maund and closed it at Rs 8800 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all bearish trends was seen in the international market. Fluctuation was seen in the rate of New York Cotton market due to both positive and negative news regarding America and China trade conflict.

According to the weekly export report of USDA; exports decreased by 42 percent as compared to last week. However, on Friday due to the positive news regarding America and China trade conflict the Rate of Promise (Waday Ka Bhao) of New York Cotton increased by 150 American cents per pound. Rate of Promise (Waday Ka Bhao) for March reached at 66 American cents.

In China also downward trend was seen in the rate of cotton while in India like all other businesses textile sector was facing huge financial crisis. The crisis is increasing day by day as a result of which volume of textile businesses decrease by 30 percent to 40 percent. Indian economy is continuously dipping.

Pakistan Cotton and Ginners Association has released the statistics of production of cotton till December 1 according to which 74 lac 74 thousand bales are produced in the country which is 19 lac bales almost 21 percent less as compared to last year.

Naseem Usman told that due to the continuous decrease in the production of cotton has increased the concern. There is a need to take positive steps on war footings to increase the production of cotton. In this regard chairman Karachi Cotton Brokers Forum and members of the Cotton Brokers Advisory met with chairman Karachi Cotton Association Khawaja Muhammad Zubair and discussed with him the ways to increase the production of cotton and asked him that he should press the government officials that the should evolve a strategy regarding increasing the production of cotton on war footings especially Hybrid seeds should be produced in the country or should be allowed to be imported because delay can further destroy the cotton crop.

The cotton farmers were disheartened and we're looking towards other crops. Government should give incentives to cotton farmers and should announce support price of cotton like other crops. Consultation with chairman Karachi Cotton Association regarding putting the business of cotton on right track is need of time. Moreover steps regarding putting the cotton trade on right track were discussed with the chairman.

It was requested that APTMA and PCGA should evolve a strategy after consultation especially for the regularization of business of cotton and cotton brokers. The agreements of cotton should be made contracts. Government should be requested to take steps for increasing the production of cotton in Balochistan. Government should be requested to restore Batch trading in Karachi Cotton Association. The exports of textile are increasing due to the payment of sales tax refund.