KARACHI: The spot rate of cotton increased by Rs 300 per maund in the local cotton market. Extraordinary fluctuation was observed in the cotton prices in the international cotton market. Is there any conspiracy being hatched to reduce Pakistani industrial and agriculture production? Tension escalates between All Pakistan Textile Mills Association and Value Added sector on the issue of import of cotton yarn. APTMA and Valued Added sector should sit together and find a positive solution of this problem.
In the local cotton market during the last week the rate of cotton remained stable however, the spot rate of cotton increased by Rs 300 per maund. The reason behind increasing the spot rate is alarming decrease in the production of cotton. Although over all bullish trend prevails in international cotton markets but during the last two weeks extraordinary fluctuation was observed in the Rate of Promise (Waday Ka Bhao) of New York Cotton as sometimes the rate increase by two cent or some time by three cent. Over all bullish trend, was witnessed in international cotton markets all over the world.
Up till now in the local cotton market ginners had the stock of one lac fifteen thousand bales to one lac twenty thousand bales which is very limited. There is still some time left in the new season and therefore there is no possibility of further decline in the local market. Small mills especially open end mills were facing difficulties because the big mills are using their waste and what these mills are selling their rate is very high that why open end mills are facing difficulties and they will have to decrease their shifts or they have to close their mills partially.
What the big mills have imported will be relatively cheap for them as the dollar has come down to around Rs 157 to Rs 158 but on the other side they will suffer some loss in what way have exported because the rate of dollar is decreased but the mills that have completed their import are satisfied. But mills who had not imported were getting a thing of Rs 9000 in Rs 12000.
On the other hand for the last two weeks the tension escalates between APTMA and value added sector. The value added sector is complaining that we are not getting yarn at a reasonable rate to meet the export order, so they are constantly demanding from the government to allow import of yarn from India. On the other hand APTMA is against importing of yarn. They were of the view that they had enough yarn in the local market. They bought yarn on high price so how they can sell it on lower than buying rate.
The cotton yarn crisis is becoming alarming but experts are of the view that both APTMA and Value added sector should sit together and came out with a solution which is acceptable for both. Our many mills are composite mills they are also in value addition so it will not be difficult for them. There is a permission to import yarn from other countries other than India. More over many mills had DTRE facility and they don't have to pay any duty on the import of yarn. Waste and Comber in large quantity is being imported so they should sit together and came out with a solution which full fills each other needs. If they can sit together it will be better for the textile industry of the country. Under the influence of increasing petroleum prices the rate of polyester fiber is increasing and due to this the rate of PC Yarn is increasing.
The rate of cotton in Sindh is in between Rs 10,300 to Rs 12,500 per maund. The rate of Phutti which is available in limited quantity is in between Rs 4600 to Rs 5200 per 40 Kg. The rate of cotton in Punjab is in between Rs 12000 to Rs 12500 per maund and the rate of cotton on borrowing basis in Punjab is in between RS 12700 to Rs 13000 per maund. Phutti was almost over in many stations in Punjab however, the rate of Phutti was in between Rs 4800 to Rs 6300 per 40 kg, which was partially available on some stations.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 300 per maund and closed it at Rs 12300 per maund.
Chairman Karachi Cotton Brokers Forums Naseem Usman told that over all bullish trend was witnessed in the international cotton markets especially the Rate of Promise (Waday Ka Bhao) of New York Cotton witnessed an extraordinary fluctuation as sometimes rate increased by three cent and at the same time decreased by 4 cent. In the weekly USDA export report, exports increased by 25 %. The rate of New York Cotton remained stable. The reason behind fluctuation in the rate of New York Cotton is that this time too China is the biggest importer with 58000 bales. The rates of cotton were increased in cotton producing countries which includes Brazil, Argentina, Central Asian states and Australia especially increasing trend was witnessed in the rate of cotton in India.
According to World Agricultural Supply and Demand Estimates (WASDE) report production of cotton decreased in America as compared to last month. It shows that production was 250,000 less as per March 9 report. The estimates regarding production this year in America will be published in 2021. Due to the recovery of industry from last year's loss demand decreased by one lac bales. In the ending stock of this month out of 4.2 million bales around 100, 000 bales were less. Expected marketing year average price of applied producers is 69.0 cent which is one cent more than last year price.
According to the estimates of world demand and supply of cotton as compared to last month the production is less as well as the ending stock is less. But the cotton production worldwide witnessed a decrease of 830.000 bales. The biggest reason is the decrease in the production of cotton in Brazil and America. The pace of import of cotton and the signs of increase in demand internationally also increased the demand in Turkey, Pakistan, Bangladesh and Vietnam.
According to the estimates it is expected that imports will be increased in America and Taiwan because their demands are high. Their demands will be according to World Trade estimates will be 600. 000 bales in the current month.
Exports in India witnessed an increase because the Cotton Corporation of India through auction has released a large portion of what was purchased last year under the Minimum Support Program.
The forecast of worlds ending stock is 1.1 million bales less as compared to last month and is at, 94.6 million bales.
According to Naseem Usman some sources are expressing suspicion that some external conspiratorial elements are involved in the declining industrial and agricultural production in the country because our agriculture is shrinking day by day and the commodities which we were exporting, now we are importing after giving subsidies; especially wheat and sugar. As well as we are importing cotton after spending huge foreign exchange.
The situation of cotton and cotton seed is alarming. We are not producing good quality seeds as well as we are also not importing good quality cotton seeds. The government is not fixing the support price of cotton. Pesticides and seeds are substandard. Besides it has been heard that the government has increased the electricity tariff on tube wells or it will be taxed. This is also a conspiracy against our agriculture; already shrinking. In the same way our industrial production is decreasing.
When our industrial production starts to increase, hindrances were created in its way sometimes by increasing the energy prices. Our textile sector gets good boost this year but it should be consistent and should not be short lived.
The textile sector plays an important role in the development of our industry. Textile exports in particular are increasing and jobs are also increasing. The textile sector was getting good export orders from abroad but the government had increased the power tariff as well as increase the rate of captive gas due to which the textile sector is in trouble.
The crisis is increasing due to the yarn shortage. The government is saying that supply of power to the export industry will be disconnected. In this situation export orders will be affected and may be cancelled. This is a kind of conspiracy that is being seen every time. Our government officials should take a closer look at what is happening to the country. For example there are reports that government is suspending supply of energy to industry. In this regard, chairman APTMA has written a letter to Prime Minister of Pakistan three days ago; informing him that he should look in to the matter himself. This is a conspiracy to stop the investment of Rs two billion coming in to the textile sector.
Copyright Business Recorder, 2021