KARACHI: Cotton prices have risen by Rs 500 to Rs 1000 per maund, with Rs 600 per maund increase in spot rates. However, business volume remained relatively low due to rainfall.
Cotton production has reached eight lac and forty four thousand bales, which is five lac and eighty four thousand bales (40.90%) less than last year’s production of more than fourteen lac and twenty nine thousand bales.
All Pakistan Textile Mills Association (APTMA) has called for a reduction in interest rates and energy prices. The government has hinted at reviewing power purchase agreements with Independent Power Producers (IPPs). Cotton yarn exports have seen a 13% increase.
The local cotton market experienced gains during the previous week. However, business volume remained relatively low due to reduced cotton supplies after rainfall. The international cotton market also remained sluggish, facing persisting issues of cotton supply and demand. Furthermore, most ginners are facing problems of payments and settlements.
The rainy season in Sindh, Balochistan, and Punjab is impacting business activities, and the quality of cotton is also being affected. The quality issue is expected to persist for a few days. It is anticipated that there will be some improvement in cotton trade after August 15.
On the other hand, there are varying opinions about the cotton situation in the country, and there are question marks over production. It’s too early to say anything for now, but there are concerns that cotton farmers are facing losses due to low prices. It may be possible that farmers don’t made efforts for increasing the cotton crop, resulting in further damage to the crop.
Apart from this, there is no good news regarding the country’s industries, especially the IPPs issue, which is creating a serious situation day by day. The textile sector is also affected and suffering greatly due to this, and its effects are being seen on cotton trade, as well. The government has hinted at reviewing the IPPs agreements. Although the State Bank of Pakistan (SBP) has reduced the interest rate to 19.5% but it seems that the trade has not been positively affected and thus demanding a further reduction.
In Sindh province, the cotton price per maund ranged from Rs 17,300 to Rs 17,500, while the phutti price per 40 kg was in between Rs 6,700 and Rs 7,400.
In Punjab province, the cotton price per maund ranged from Rs 17,900 to Rs 18,300, while the phutti price was in between Rs 7,200 and Rs 8,300 per 40 kg.
In Balochistan province, the cotton price per maund ranged from Rs 17,200 to Rs 17,400, while the phutti price was in between Rs 7,000 and Rs 7,400 per 40 kg.
The Karachi Cotton Association’s Spot Rate Committee increased the spot rate by Rs 600 per maund, closing at Rs 17,600 per maund.
Karachi Cotton Brokers Forum Chairman Naseem Usman has said that the international cotton market experienced an overall decline. According to the USDA’s weekly export and sales report, more than ten lac and eighty five thousand bales were sold for the year 2023-24. China topped the list with five lac and ninety seven bales, followed by Pakistan with more than three lac and sixty nine bales, and Vietnam is on number third with two lac and fifteen thousand bales.
For the year 2024-25, more than thirteen lac and fifty five thousand bales were sold. China again led the list with six lac and fifty thousand bales, followed by Pakistan with four lac and nine thousand bales, and Vietnam ranked third with two lac and fifteen thousand bales.
Pakistan Cotton Ginners Association (PCGA) has released cotton production data up to July 31, which shows that more than eight lac and forty four thousand bales were produced in the country.
The report shows a decrease of more than five lac and eighty four thousand bales (40.90%) as compared to more than fourteen lac and twenty nine thousand bales produced during the same period last year.
In Punjab, cotton production stood at more than two lac and ninety two thousand bales, a decrease of 96,013 bales (24.71%) compared to last year’s production of more than three lac and eighty eight thousand bales.
In Sindh, cotton production was more than five lac and fifty one thousand bales shows a decrease of more than four lac and eight thousand bales (46.96%) compared to last year’s production of more than ten lac and forty thousand bales.
During this period, exporters purchased 400 bales, a decrease of 7,100 bales (94.67%) compared to last year’s 7,500 bales.
Textile mills purchased more than seven lac and forty thousand bales shows a decrease of more than five lac and forty thousand bales (42.09%) compared to last year’s more than twelve lac and eighty four thousand bales.
Ginners have a stock of 99,774 bales, a decrease of 36,545 bales (26.81%) compared to last year’s more than one lac and thirty six thousand bales.
During the last two weeks, cotton arrivals were more than four lac and two thousand bales, a decrease of more than one lac and sixty eight thousand bales (29.51%) compared to last year’s more than five lac and seventy thousand bales.
Currently, 268 ginning factories are operational, a decrease of 100 factories compared to last year’s 368 factories.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, commented on the report, saying that this year’s cotton crop was relatively low and weather conditions were unfavourable, resulting in reduced production. He said that some unregistered trades may have taken place. However, interestingly, the Punjab Agriculture Department’s Crop Reporting Service Wing has reported cotton production in Punjab up to July 31 as more than four lac and fifty thousand bales, which is one lac and fifty seven thousand bales more than the PCGA’s reported figure of more than two lac ninety two thousand bales.
Moreover, APTMA has demanded a significant reduction in interest rates to 6-7% to boost the textile industry. It says that high interest rates and exorbitant energy costs have led to the closure of over 30% of textile mills and production cuts in others. Textile exports have declined from $19.33 billion in FY22 to $16.5 billion in FY23, despite the government’s ambitious export target.
APTMA attributes the rising production costs to an unfavourable business environment and calls for an export-friendly policy framework.
The association criticises the government’s energy policy, particularly the high cost of electricity due to Independent Power Producers (IPPs). It opposes the government’s plan to cut off gas supply to captive power plants.
Pakistan has recorded a 13% annual increase in cotton yarn exports. According to the Pakistan Bureau of Statistics, the country’s cotton yarn exports totalled $956 million in the fiscal year 2024, up from $844 million in the previous
fiscal year.
In June, cotton yarn exports amounted to $45 million, a 58% decrease from the same month last year when exports were worth $107 million. Compared to May, June saw a 29% monthly decline in cotton yarn exports, from $64 million to $45 million.
It is worth noting that the total exports of the textile group in the fiscal year 2024 stood at $16.656 billion, a 0.9% increase from the previous fiscal year’s $16.502 billion.
Copyright Business Recorder, 2024