KARACHI: The local cotton market remained bullish on Thursday. Market sources told that trading activity was low.

Cotton prices on Thursday climbed over 2% to their highest level since April 2019, propelled by a strong weekly exports sales report and hopes for more US economic stimulus and its likely fillip to demand for the natural fibre.

The cotton contract for March was up 1.59 cent, or 2.1%, at 77.24 cents per lb by 11:56 a.m. EST (1656 GMT). It traded within a range of 75.51 and 77.34 cents per lb.

“There’s a lot of enthusiasm in the market, a lot of optimism, especially surrounding new stimulus bill in the US,” said Bailey Thomen, cotton risk management associate with StoneX Group.

“Another factor contributing is that the export sales were really strong once again. We might be seeing a little bit of shortage if we continue to have this much demand,” she added.

The US Department of Agriculture’s weekly export sales report showed net sales of 402,900 running bales for 2020/2021, up 4% from the previous week and 44% from the prior four-week average.

Cotton Analyst Naseem Usman told that Ministry of Commerce, after revising the initial draft, has finally submitted the Textile Policy 2020-25 to the Economic Coordination Committee (ECC) of the Cabinet for approval. As per the proposed policy ministry proposes incentives worth Rs 900bn.

Naseem also told that textile exports of Pakistan seem to have stabilized substantially from the Covid-19 pandemic shocks and are still increasing. Recent monthly data released by the Pakistan Bureau of Statistics for the first four months of the current financial year shows that exports of textiles and garments are back on a pace of growth in terms of both supply and market price.

The statistics show that between July and October, textile shipments rose by 3.8% to $4.8 billion from $4.6 billion a year earlier. The increase in the textile and clothing group was a week faster than the overall export rise of 0.6pc. In the knitwear, home textiles and denim categories, the export recovery is most pronounced.

In some of these cases, there is also a major decline in exports of basic textile goods such as yarn and grey cloth, signalling that more value-added items are being exported by the country than ever before. It also represents a shortage of raw materials due to an incredibly low cotton harvest this year for the value-added industry. Furthermore, due to a sharp drop of 37.6pc in cotton arrivals for ginning to 4.6 million bales by December 3, local cotton prices have peaked to a 10- year high compared to 7.4 million bales last year.

Naseem further told that this year especially 200,000 bales will be imported from Afghanistan. Moreover, Phutti in abundance is also coming from Afghanistan. Sources told that Phutti equivalent to 10,000 bales has reached Pakistan. Phutti in few factories of Dera Ghazi Khan were coming from Afghanistan but this year Phutti in abundant quantity from Afghanistan has arrived in ginning factories of Punjab, Sindh and Balochistan. Seed companies are buying banola of Afghani cotton from ginners which will be grown locally in coming season.

Naseem told that 400 bales of Dherki were sold at Rs 10,000 per maund, 1800 bales of Rahim Yar Khan were sold at Rs 10,200 to RS 10,300, 800 bales of Sadiqabad were sold at Rs 10,300, 800 bales of Shujabad were sold at Rs 9800 to Rs 9850, 200 bales of Haroonabad were sold at Rs 9700, 200 bales of Faqeer Wali and 600 bales of Yazman Mandi were sold at Rs 9700.

He told that rate of cotton in Sindh was in between Rs 8800 to Rs 10,000 per maund. The rate of cotton in Punjab is in between Rs 9500 to Rs 10,300 per maund.

He also told that Phutti of Sindh was sold in between Rs 4000 to Rs 4700 per 40 kg. The rate of Phutti in Punjab is in between Rs 4000 to Rs 5200 per 40 Kg.

The rate of Banola in Sindh was in between Rs 1500 to Rs 1825 while the price of Banola in Punjab was in between Rs 1600 to Rs 2200. The rate of cotton in Balochistan is Rs 9200 per maund.

The Spot Rate remained unchanged at RS 9950 per maund. The price of Polyester Fiber was increased by Rs 5 per kg and was available at Rs 173 per Kg.

Copyright Business Recorder, 2020