KARACHI: A significant reduction of Rs 2,000 per maund in the rate of cotton. Spot rate also reduced by Rs 2,000 per maund. Bearish trend observed in international cotton markets. A significant reduction of 5 cent in the rate of Future Trading of New York Cotton. The economy of the country is in severe crisis due to the very strict conditions of the International Monetary Fund.
The textile sector is also severely affected. 8.17% decline in textile sector exports in last 7 months. Partial sowing of cotton has started in the cotton producing areas of Lower Sindh.
In the domestic cotton market, cotton prices fell significantly by Rs 1,500 to Rs 2,000 per maund as compared to previous week due to cautious buying by textile spinners as compared to panic selling by cotton ginners.
During the last consecutive week, due to strong dollar and L/C issues, textile spinners increased their interest in buying local cotton, which led to an increase in the price of cotton and relatively good cotton was available at Rs 23,000 per maund and an average quality cotton was sold at Rs 21,000 per maund and light quality cotton was sold around Rs 20,000 per maund which is currently available at Rs 18,000 to Rs 20,500 per maund.
But during the week under review, the government presented a mini-budget taking strict measures to meet the strict conditions of the IMF. Government has increased the prices of energy and petroleum products, GST were increased from 17% to 18% as well as abolished zero rating for export sector. Due to removal of energy concessions for export industries including textile sector and depreciation of rupee against the dollar, the textile sector is again in a state of crisis.
On the other hand news is circulating that government is considering increasing the rate of interest from 17% to 20 %. The escalating conflict between Ukraine and Russia has increased the worldwide recession.
Meanwhile, according to the reports received from the areas of Lower Sindh, partial sowing of cotton has started in several pockets. According to the conversation with the farmers of Degri, Badin and Garo, Sajawal cotton cultivation has started in their surrounding areas like Sakaro and in some areas of Degri and Matiari. Up till now the situation is satisfactory.
On the other hand due to strengthening of dollar in USA the rate of Future Trading of New York Cotton witnessed a decrease of 5 American cents.
The rate of cotton in Sindh is in between Rs 18,000 to Rs 20,500 per maund. The rate of Phutti is in between Rs 6,500 to Rs 9,700 per 40 kg. The rate of cotton in Punjab is in between Rs 18,000 to Rs 20,500 per maund while the rate of Phutti is in between Rs 7,000 to Rs 10,200 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 2,000 per maund and closed it at Rs 19,800 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that bearish trend prevails in international cotton. The rate of Future Trading of New York Cotton fell by five American cents.
According to the weekly USDA export report 216,900 bales for the year 2022-23 were sold which is eighteen percent less as compared to last year.
Vietnam was on top of the list by buying 67,700 bales (including 3,100 bales from China and 1,100 bales from South Korea). China bought 61,600 bales (including 8,800 bales swapped from Vietnam) and came second. Pakistan bought 23, 300 bales and stood at the third position. 23,900 bales were sold for the year 2023-24. Portugal was at the top by buying 22 thousand bales while, Thailand bought 1,900 bales and was second.
The country’s textile group exports declined by around 8.17 percent during the first seven months (July-January) of the current fiscal year 2022-23 and remained at $10.039 billion as compared to $10.933 billion during the same period of last year, the Pakistan Bureau of Statistics (PBS) said.
The data of exports and imports released by PBS revealed that the country’s textile group exports witnessed a decline of 14.83 percent in January 2023 on a year-on-year basis and remained at $1.321 billion when compared to $1.551 billion during the same month of last year.
On a month-on-month (MoM) basis, the textile group registered 2.53 percent negative growth compared to $1.356 billion in December 2022. Cotton yarn exports registered 34.66 percent negative growth in July-January and remained $449.419 million compared to $687.857 million during the same period of the last year. On a year-on-year basis, cotton yarn exports registered 12.34 percent negative growth, while on a MoM basis, it registered 27.22 percent growth.
Rice exports declined by 15.82 percent during the first seven months of 2022-23 and remained $1.083 billion compared to $1.286 billion during the same period of last fiscal year. The country’s overall exports during July-January2022-23 totaled $16.499 billion (provisional) against $17.739 billion during the corresponding period of last year showing a decrease of 6.99 percent.
The exports in January 2023 were $2.244 billion (provisional) as compared to $2.313 billion in December 2022 showing a decrease of 2.98 percent and by 14.15 percent as compared to $2.614 billion in January 2022. Main commodities of exports during January 2023 were knitwear (Rs78,859 million), readymade garments (Rs68,566 million), bed wear (Rs49,490 million), cotton cloth (Rs37,225 million), rice others (Rs23,630 million), towels (Rs21,338 million), cotton yarn (Rs15,891 million), made-up articles (excl towels and bed wear) (Rs13,203 million), rice basmati (Rs12,754 million) and surgical goods and medical instruments (Rs9,350 million).
In addition, the industrialists have said that the textile sector of the country will be further affected by ending the subsidies on electricity and gas. They also expressed their fear that factories will be closed and unemployment will increase due to the increase in production costs. According to the industrialists associated with textiles, at a time when the country’s exports are falling, if electricity and gas prices rise, it will not be possible to compete with rival countries in export markets. According to the manufacturers, when we accumulate inflation, price of electricity, price of gas and if we take back subsidy then it has a huge impact.
According to the workers, as the cost of electricity is increasing, the cost of doing business is increasing and the situation is worsening day by day. They are afraid that they will be laid off.
According to the industrialists, the global recession and the current financial situation of the country have created the most difficult situation for the textile sector. In this situation if the government had taken back the subsidy on electricity and gas then the situation will be more difficult.
Copyright Business Recorder, 2023