KARACHI: Due to increase in the exchange rate of dollar the spot rate of cotton witnessed an increase of Rs 1200 per maund. Bullish trend also prevailed in the international cotton markets. Rains may cause minor damage to cotton crop. All Pakistan Textile Mills Association and Ministry of National Food Security and Research call for evolving consensus to pull economy out of crisis.
According to the Crop Reporting Services Department there is a 16.1% increase in cotton sowing in Punjab, whereas cotton sowing area in Sindh witnessed a decrease of about 13%.
A bullish trend prevailed in the local cotton market due to the high exchange rate of US dollar. Almost all cotton-producing areas of the country are under the spell of rains, as a result of which there is mud in the fields.
The picking of cotton is decreasing and the quality of cotton is also affected, but due to the increase in the rate of dollar, the import of cotton is also becoming more expensive, so the spinning mills are forced to buy low quality cotton at high prices. Demand and prices of cotton yarn are sluggish. Some mills are exporting cotton yarn and textile products due to increase in the rate of dollar, but its quantity is low.
The price of cotton fluctuated by Rs 17,000 per maund in two months since the beginning of the new season. The rate of cotton was Rs 22,500 to Rs 23,000 per maund at the start of the season which after decreasing reached at the lowest level of Rs 13,000 to 13,500 per maund before Eidul Adha. However, afterwards it increased by Rs 7,000 per maund and reached at the highest level of Rs 20,000 per maund due to increase in the rate of dollar and rains.
In the same way, fluctuation continued in the rate of Phutti during the last two months and there was uncertainty and chaos in the market.
During the week under comment, there has been an extraordinary increase in the price of cotton, despite the quality not being suitable the price of cotton is increasing as demand of cotton is high.
The rate of cotton in Sindh is in between Rs 18,500 to Rs 19,200 per maund. The rate of Phutti as per quality is in between Rs 4500 to Rs 6500 per 40 kg.
In Punjab province, the price of cotton was Rs 19,800 to Rs 20,200 per maund, and the price of Phutti was Rs 8,500 to Rs10,000 per 40 kg.
Due to rains in Balochistan province, only three ginning factories are running there, partially. The price of cotton was in between Rs18,500 to Rs 19,000 per maund and the price of Phutti was Rs6,500 to Rs9,000 rupees per 40 kg.
The Spot Rate Committee of Karachi Cotton Association increased the spot rate by Rs1200 per maund and closed the spot rate at Rs19200 per maund.
Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that there is a tendency of increasing the price of cotton in the international cotton markets. The rate of Future Trading of New York cotton after increasing reached at 96.74 US cents per pound. According to the USDA’s weekly export and sales report, sales for 2021-22 were 4,000 bales, significantly lower than last week. Vietnam took the first place by purchasing 6,400 bales. Ecuador came in second with 700 bales. Japan was third with 400 bales.
As many as 55,700 bales were sold for 2022-23. Vietnam was on number one with by 26,000 bales. Turkey bought 8800 bales and came second. Malaysia bought 6,600 bales and came third. Bangladesh bought 4,000 bales and stood at the fourth position.
Pakistan bought 3100 bales and stood at the fifth position.
Naseem Usman told that the sowing of cotton crop 2022-23 season in Punjab is at final stage whereas sowing in Sindh has been completed. According to the first estimate report released by Crop Reporting Service Department Punjab, the cultivated area of cotton recorded at 1.485 million hectares which comprises 81.5 % of target and about 16.1 % higher than previous year.
However, sowing area in Sindh was registered at 0.517 million hectares comprising 80.8 % of the target and about 13.0 % less than previous year. Total cultivated area of both provinces placed at 2.002 million hectares which shows 81.4 % against target and an increase of 6.9 % as compared to last year.
The recent monsoon rains will have no negative impact on overall agriculture production of major Kharif crops including cotton, sugarcane, rice and maize but agriculture experts warn if rains continue into next week it will harm the cotton crop in the country.
A senior official of Ministry of National Food Security and Research (MNFS&R) and an agriculture expert said that the ongoing rains would have positive impact on both high delta Kharif crops including sugarcane, rice and maize and low delta Kharif cotton. If heavy rains continue in the cotton belt it would have a negative impact on its output as rain causes various diseases in cotton crop.
They said that large amount of standing water for more than 24 to 48 hours is not beneficial for the cotton crop.
Dr Khalid Abdullah, Cotton Commissioner of MNFS&R told Business Recorder that recent rains would not affect cotton crop as currently crop is at its vegetative growth stage but in case rains persist, then it would negatively impact on the cotton crop.
Federal Committee on Agriculture (FCA) during its previous meeting held on April 1, fixed 11 million bales of cotton production target from an area of 2.5 million hectares for year 2022-23. The meeting also fixed 8.6 million tons production target for rice over an area of 3.1 million hectares. The FCA fixed the production target of sugarcane for year 2022-23 at 78.6 million tons from an area of 1.2 million hectares.
All Pakistan Textile Mills Association (APTMA) on Friday urged all political leaders and policymakers to develop a consensus on how to navigate from the situation of extreme distress and pull the economy out of current downward spiral.
Chairman APTMA Rahim Nasir said political instability is a serious impediment to economic progress. “Not only does it shorten policymakers’ horizons leading to suboptimal short-term macroeconomic policies, but it is also the cause of frequent policy U-turns and leads to non-completion of ongoing projects,” Nasir said.
“Stability and consistent policy implementation are crucial for economic growth and for the export sector to thrive and contribute dollar earnings to stabilize the balance of payments for a sustainable economic outlook.”
Copyright Business Recorder, 2022