COTTON REVIEW: Trading volume continues to decline

Under the influence of international cotton market, the decreasing trend was witnessed in the prices of local cotton. Trading volume continued to decline. Lack of good quality seeds: There is a need to evolve positive strategy in order to increase the production of cotton. A new survey of cotton production area should be conducted.

In the local cotton market during the last week due to the cautious buying from the textile mills and due to the decreasing of the stock of good quality cotton the trading volume decreases. Cotton prices have decreased by Rs100 to Rs200 per maund. The ginning factories were also closing. The buying of local cotton has decreased because the delivery of cotton imported by big groups has started.

The mills who don't have the capacity to import are buying cotton from the local ginners according to their needs. There are a very few buyers of the good quality cotton available with ginners. Currently, ginners had the stock of eight million bales while remaining two hundred thousand bales will be imported. In this way the total production of cotton in the country will be 8.5 million bales. The agreements for the import of 4.5 million bales have been signed and more agreements were in the pipe line.

According to the figures of All Pakistan Textile Mills Association, 6 million bales worth around two billion dollars will be imported. The government, which is already in severe financial crisis, had to bear the additional burden of the import bill. Government had to evolve a strategy on war footings to increase the production of cotton in order to save foreign exchange. The government had to evolve a strategy before the next sowing season which is going to start in two to three months. If the government had not evolved a strategy for increasing the production of cotton immediately it is feared that production of cotton will decrease further, the experts opined.

In Sindh, the prices of cotton is in between Rs 7000 to Rs 9200 per maund while the rate of Phutti is Rs 2800 to Rs 4300 per 40kg. In Sindh, the rate of cotton is believed Rs 7600 to Rs 9200 per maund while the rate of Phutti is said Rs 3200 to Rs 4600 per 40kg.

The Spot Rate Committee of Karachi Cotton Association has decreased the spot rate by Rs 100 per maund and closed it at Rs 9000 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman said that during the last season due to untimely rains, unfavorable weather conditions and due to substandard cotton seeds production of cotton affected badly. He also said that government had not introduced new cotton seed as well as no steps were taken to stop the use of substandard pesticides.

During the National Assembly session held a few days back on the issue of agriculture, the spokesman for NFRS said that a special committee has been constituted under the chair of Prime Minister Imran Khan for increasing the production of cotton but well-informed sources said that no such committee has been constituted up till now. If such committee existed then its report should be made public.

The government has allocated Rs 360 billion for increasing the agricultural production of the country but not a single penny has been allocated for increasing the cotton production of the country.

We had pointed out in the last report that every year Federal Agricultural Committee gave estimates of the cotton sowing area which was accusing to experts based on hypothesis. The committee gave the estimates after nominal changes while the ground realities are different from the estimates of FAC.

They should give estimates after conducting survey of the sowing area at district level. During the last two years, farmers were sowing corn on the area of cotton. Moreover, the government should announce support price of Phutti so that farmers can get reasonable price of Phutti but the cotton is treated like a stepmother despite of the fact that it's importance is much more than other crops.

The government of Punjab has imposed a section 144 in order to control Pink ball worm. The government will take action against those who were involved in stocking of cotton weeds. Pakistan Cotton Ginners Forum has registered a complaint against selling unregistered seed to specific people. According to them, this will cause irreparable damage to cotton crop.

According to chairman Karachi Cotton Brokers Forum Naseem Usman the coronavirus is having a negative impact on international markets. Its effects were also seen on cotton market, especially the Rate of Promise (Waday Ka bhao) of New York Cotton comes down.

The Rate of Promise (Waday Ka bhao) of March comes down by three cent and was less than 68 American cents. Although, as per last week report of USDA the export of cotton increased by 13 percent particularly China has again starting importing American cotton.

According to the recent report, China has signed agreements for the import of one hundred and ninety thousand bales of American cotton but against the expectations instead of increasing the rate of New York Cotton comes down.

In China, there were holidays due to the Lunar Festival but due to the spread of coronavirus holidays were extended. Obviously, there is no business. There is fluctuation in Indian cotton market. In the local cotton market bearish trend was witnessed.