KARACHI: Extraordinary bearish trend prevails in domestic and international cotton markets. The rate of quality cotton witnessed a significant reduction of Rs 4,000 per maund. The spot rate also decreased by Rs 3,000 per maund.
According to the fortnightly report of Pakistan Cotton Ginners Association released on Saturday, the production of cotton reduced by 2 lakh 51 thousand bales.
Due to disparity in cotton and cotton products, some mills are closed, or partially functioning. About 70 lakh bales of cotton will have to be imported. At present, import contracts of about 35 lakh bales have been signed.
After a continuous boom, the local market started to decline. Last week, the price of quality cotton rose to a historic high of Rs 23,500 to Rs 24,000 per maund, but from the beginning of the week under review, the market began to come under pressure. There was a decrease in the price of cotton from time to time, and there was a significant decrease of about Rs 4,000 rupees per maund. The disparity of cotton yarn and textile products was greatly increased. Due to which many mills were forced to close down and many mills reduced their shifts by decreasing production; besides, there is a severe recession in the international markets. There was almost no demand of textile products in the market.
There are very few export orders for garments due to which many garment factories are closed. Many other factories are on the verge of closing.
United Business Group (UBG) Patron-in-Chief S M Munir, UBG President Zubair Tufail, President KATI Salman Aslam and Mirza Akhtar Baig said that most of the area of Pakistan has been submerged due to catastrophic floods. The state of the country’s economy is very bad. Almost 90% of Faisalabad’s industries have closed down. Exports have also suffered a severe blow. Exports will suffer further in future. Due to floods, the agricultural products, especially the cotton crop, have been destroyed and there is a fear of shortage of food items also. The government promised a surcharge of 9 cents on five export sectors, but 14 cents is being charged, which will further hurt the exports.
According to an estimate, the cotton crop has been severely affected due to continuous heavy rains and devastating floods, due to which the total production of cotton in the country is expected to be around 65 lakh bales. However, it is too early to predict. The forecast can be made by the second week of September, but according to the Meteorological Department, two more spells of rain are expected in the month of September. No one knows what would happen after that? While about 70 lakh bales of cotton will have to be imported from foreign countries, currently import agreements for 35 lakh bales have been made.
Currently, the price of cotton in Sindh province is 17,000 to Rs 20,000 per maund, the price of Phutti per 40 kg is Rs 6000 to Rs 8500.
In Punjab province, the price of cotton per maund is Rs 19,000 to 20,000 while the price of Phutti per 40 kg is Rs 7,000 to Rs 10,000. In Balochistan province the price of cotton was Rs 18,000 to Rs 19,000 per maund and the price of Phutti was Rs 7,000 to Rs 11,000 per 40 kg. The price of Banola, Banola Khul and Banola oil has decreased.
The Spot Rate Committee of Karachi Cotton Association reduced the spot rate by Rs 3,000 per maund and closed the spot rate at Rs 20,000 per maund.
Naseem Usman, chairman of Karachi Cotton Brokers Forum, said that the downward trend in cotton prices prevailed in the international cotton markets. Rate of New York cotton for December delivery fell 1.18 cents a pound to a low of 1.03 US cents a pound. In India too, the price of cotton saw a significant decline.
Seed cotton (Phutti) equivalent to over 1.5 million or exactly 15,39,710 bales have reached ginning factories across the country till September 1, registering decrease of 14.04 percent as compared to corresponding period of last year.
According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA) released on Saturday, over 1.4 million or 14,04,254 bales have undergone the ginning process, i.e., converted into bales. Cotton arrivals in Punjab were recorded at over 0.7 million or 7,03,993 bales registering a surplus of 29.09 percent as compared to corresponding period of last year when arrivals were recorded 1,58,650 bales.
Copyright Business Recorder, 2022