KARACHI: The cotton market is currently experiencing a period of fluctuations. This year cotton production has seen a significant decline of approximately 25 lac bales, which is about 33% of the total crop yield. Experts estimate that the total production for this year will be 58 lac bales, excluding any unregistered cotton.
The All Pakistan Textile Mills Association (APTMA) has urged the government to include local cotton in the Export Finance Scheme (EFS). Moreover, the excessive import of cotton yarn has caused significant distress among spinners and ginners.
The Pakistan Cotton Ginners Association (PCGA) has stressed on the need of urgent government policy to boost cotton production in Pakistan.
Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood has raised concerns about the factors contributing to the decline in cotton production this year.
The price of cotton in the local cotton market remained relatively stable last week, depending on the quality.
According to the Pakistan Cotton Ginners Association, the cotton production report for the country up to December 1st shows 52 lac bales, which is about 25 lac bales less than last year’s production. Experts estimate that the total production will be around 58 lac bales, plus unregistered cotton. However, due to the lower production reports, some ginners are hesitant to sell, and many ginners are storing some bales of relatively high-quality cotton, expecting an increase in prices.
On the other hand, the pace of cotton import deals has slowed down a bit because the price of cotton futures in New York has become more stable. However, importing agents say that they’ve already made deals for about 35 lac bales of cotton.
Currently, the cotton stock held by ginners is mostly of relatively low quality. This has led to slow sales, causing many ginners to face difficulties.
Textile spinners are also facing challenges due to the import of a large quantity of cotton yarn. However, there is a hope that the interest rate will be further reduced in the upcoming monetary policy, which could encourage mills to purchase more cotton.
The rate of cotton in Sindh is in between Rs16,000 to Rs 18,000 per maund, while the rate of Phutti is in between Rs 6,500 to Rs 7,800 per maund.
The rate of cotton in Punjab is in between Rs 16,600 to Rs 17,800 per maund. The rate of Phutti is in between Rs 7,000 to Rs 9,000 per 40 kg.
The rate of cotton in Balochistan is in between Rs 16,800 to Rs 17,500 per maund. The rate of Phutti is in between Rs 7,400 to Rs 9,000 per 40 kg.
The rate of Balochi cotton is in between Rs 18,000 to Rs 18,500 per maund. The prices of Primark cotton is in between Rs 18,800 to Rs 18,900 per maund.
The prices of Banola, Khal, and oil have generally increased.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 100 per maund and closed it at Rs 17,300 per maund.
Nasim Usman, the chairman of the Karachi Cotton Brokers Forum, has stated that there has been fluctuation in international cotton prices. After an increase in the future price of New York cotton, it has slightly decreased and is currently trading between 70 to 71 US cents per pound. According to the USDA’s weekly export sales report, one lac seventy thousand and seven hundred bales were sold for the 2023-2024 year.
Vietnam was the top buyer, purchasing eighty four thousand and three hundred bales. Pakistan came in second place with the purchase of thirty six thousand and seven hundred bales, followed by Turkiye with twenty thousand four hundred bales.
Meanwhile, APTMA believes that since the Finance Act, 2024, an 18% sales tax has been imposed on locally produced inputs for export-oriented manufacturing, while sales tax and customs duty exemptions under the EFS continue for imported inputs. This policy change disrupts the competitiveness of domestic manufacturers, especially upstream industries like spinning and weaving, which are essential for the Pakistan textile value chain.
The textile sector body has repeatedly requested the government to withdraw this unfair policy. Without immediate intervention, there is a risk of dismantling key parts of the textile ecosystem. Pakistan’s textile industry constitutes 40% of the country’s industrial workforce, providing livelihoods to millions of families. The current policy is not only driving businesses towards closure with significant job losses and loss of livelihood but also causing the destruction of an industrial base that represents billions of dollars in investment and exports.
Copyright Business Recorder, 2024