KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Saturday has decreased the spot rate by Rs 100 per maud and closed it at Rs 9600 per maund.

The local market remained bearish on Saturday. Market sources told that mills were involved in cautious buying due to which the trading volume remained low.

Cotton Analyst Naseem Usman told that cotton stockpiling fell a massive 43 percent to 3.45 million bales till October 31, raising concerns that the country would have to import at least 7.0 million bales worth $3 billion to fulfil domestic demand, industry officials said.

Cotton arrivals declined 43.38 percent to 3.45 million bales against 6.09 million bales in the same month last year, as heavy monsoon along with sowing substandard seeds took a toll on total yields, said the last report released by Pakistan Cotton Ginners Association (PCGA).

Punjab and Sindh showed declines of 45 percent and 41 percent respectively in cotton production during the period under review. Both provinces had stocked 1.7 million bales each till the end of October. Last year, Punjab and Sindh stocked 3.16 million and 2.92 million bales, respectively.

Karachi Cotton Brokers Association Chairman Naseem Usman said that a decline of 2.6 million bales in cotton arrivals was a point of concern.

He also told that despite the fact that cotton is an important cash crop, which contributes significantly to the national economy by providing raw material to the local textile industry, as well as cotton lint for export, policy makers failed to introduce quality seeds in the country. Currently, 864,245 bales are in stocks with ginners, down 47 percent, compared to 1.62 million bales last year.

Naseem Usman told that while Pakistanis continue to find their national honour insulted by (slated) import of sugar and wheat of $500 million, their country is set to record cotton import bill three times that value. That would mean annual cotton imports of anywhere between $ 1.4 – 1.7 billion, assuming international cotton prices remain rangebound within historic range.

The notion that Pakistan has failed to develop its value adding exports but has a solid low-value commodity export base was a bit of a misnomer; for at least past decade, the country has been a net food/agricultural importer, as output of most of its mainstay crops have struggled to maintain self-sufficiency.

Meanwhile, cotton fell more than 1% on Friday as rising global coronavirus cases and uncertainties around the US election stoked concerns about the demand of the natural fiber. The cotton contract for December was down 1.14 cent, or 1.6%, to 68.93 cents per lb at 12:57 p.m. EST (1757 GMT).

Concerns over demand with the re-emergence of the virus in Europe and worries about the impact of potential unrest tied to the US presidential election on retailers could affect Christmas sales, said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager.

Several major retail companies in the United States secured and boarded up their stores ahead of the election on fears of disturbances, looting and violence, which have not materialized.

There are concerns regarding the future of the US-China trade agreement as “if Biden is elected and does away with the tariffs, and obviously that takes away the trade agreement, which is very negative for cotton,” Jernigan added.

Chairman of National Business Group and President Pakistan Businessmen and Intellectuals Forum (PBIF) Mian Zahid Hussain has said that the government should consider the revival of zero-rating for the export sector which will infuse confidence in the exporters which is imperative for the national development.

The government spent 79 percent of total revenue receipts on debt servicing in 2019-20. So far it has secured $26.2 billion loans out of which $19.2 billion were used for debt servicing and this situation is not sustainable.

He said that the agriculture sector also merits some attention as despite being an agricultural country we are compelled to import wheat, sugar, cotton and tomatoes because farmers are being ignored and the incentives for agriculture sector hardly reach to the farmers, he said.

Naseem told that Federal Board of Revenue (FBR) has urged exporters to get maximum advantage of Duty and Tax Remission for Exports (DTRE) scheme. These include, DTRE, manufacturing bond, export-oriented unit schemes as well as temporary importation scheme under SRO 492(I)/2009 of March 29, 2009. However, these are extremely underutilized as the number of exporters making use of these schemes can be counted on fingers.

According to officials, despite being applicable to all sectors these export facilitation schemes are being largely used by textile sector. The exports of a country are dependent upon the performance of its SME exporters. Out of the prevalent export facilitation schemes, the DTRE is the most convenient for the SMEs. However, it has also not been able to achieve the desired level of popularity in the country.

Naseem told that 1000 bales of Karachi were sold at Rs 9800 per maund, 400 bales of Ghotki were sold at Rs 9650 per maund, 800 bales of Saleh Pat were sold in between Rs 9000 to Rs 9300 per maund, 800 bales of Rohri were sold at Rs 9000 per maund, 1400 bales of Khairpur were sold in between Rs 8900 to Rs 9000 per maund, 4000 bales of Haroonabad were sold in between Rs 9750 to Rs 9800 per maund, 1200 bales of Rahim Yar Khan were sold in between Rs 9725 to Rs 9800 per maund, 4000 bales of Khanpur, 800 bales of Bagho Bahar were sold at Rs 9800 per maund, 1400 bales of Fort Abbas were sold at Rs 9700 to Rs 9750, 200 bales of Yazman Mandi were sold at Rs 9750, 400 bales of Chistian were sold at Rs 9725 per maund, 200 bales of Marrot, 200 bales of Faqeerwali were sold at Rs 9700 per maund, 400 bales of Mianwali were sold at Rs 9650 per maund, 200 bales of Tunsa Shareef were sold at Rs 9325 per maund and 200 bales of Layyah were sold at Rs 9275 per maund.

He told that rate of cotton in Sindh was in between Rs 8800 to Rs 9400 per maund. The rate of cotton in Punjab is in between Rs 9400 to Rs 9600. He also told that Phutti of Sindh was sold in between Rs 3200 to Rs 4600 per 40 kg. The rate of Phutti in Punjab is in between Rs 2500 to Rs 4600 per 40 Kg.

The rate of Banola in Sindh was in between Rs 1600 to Rs 1900 while the price of Banola in Punjab was in between Rs 1800 to Rs 2000. The rate of cotton in Balochistan is in between Rs 9200 to Rs 9400 while the rate of Phutti is in between Rs 400 to Rs 5000.

The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 100 per maud and closed it at Rs 9600 per maund. The Polyester Fiber was available at Rs 158 per Kg.

Copyright Business Recorder, 2020