KARACHI: The local cotton market on Tuesday closed on a positive note. Trading volume remained increased. The rate of cotton in Sindh is in between Rs 12800 to Rs 12900 per maund. The rate of cotton in Punjab is between Rs 13700 to Rs 13800 per maund.
The rate of new crop of Phutti in Sindh was in between Rs 5700 to Rs 5900 per 40 kg. The rate of Phutti in Punjab is in between Rs 5800 to Rs 6200 per 40 kg. The rate of Banola in Sindh is in between Rs 1700 to Rs 1900 per maund. The rate of Banola in Punjab is in between Rs 1900 to Rs 2100 per maund.
Cotton Analyst Naseem Usman told Business Recorder that Chairman Pakistan Cotton Ginners Association met federal finance minister Shaukat Tareen and federal minister for National Food Security Syed Fakhir Imam to discuss the proposal of imposition of 17 percent sales tax on Cotton Seed Oil and enhancing the tax ratio on cotton from 10 percent to 17 percent.
Naseem also told that budget FY22 that has been proclaimed a pro-growth budget is largely positive for the textile sector and textile exports. In an attempt to enhance export competitiveness of local players and reduce manufacturing cost especially in the value-added segment, the government announced reduction in RD, CD, and ACD on import of raw materials like synthetic filament yarn, man- made filament yarn, woven fabrics, and artificial staple fibres. It also announced removal of 5 percent custom duty and regulatory on import of polyester yarn, which is again a reduction in the raw material cost for textile players - though it could adversely impact the spinners' cost.
However, a key demand by the textile sector continues to be the restoration of zero-rated sales tax regime for the sector, which holds little relevance today as the government has made attempts like bringing a faster refund system, paying off pending refunds to exporters and abolishing duty and taxes on industrial raw materials to address the issues of the sector.
Amid the hue and cry by the textile sector over the 'insufficient' relief measures in the latest budget, textile exports continue to post growth. At $13.75 billion, 11MFY21 textile exports increased by 19 percent, while May 2021 textile exports are up by 41 percent year-on-year. The key drivers for growth are the value-added segments particularly knitwear, bedwear, towels and readymade garments that contribute to around 70 percent of total textile exports. All value-added segments within the textile group posted double digit growth during 11MFY21; readymade garments exports saw around 15 percent growth despite 26 percent decline in volumes. And while the trend of textile export growth coming from the value-added segment continued in May and overall 11MFY21, May-21 also saw a jump in the exports of basic textiles like cotton yarn and cotton cloth despite a decline in volumes, which shows the price increase.
Meanwhile, ICE cotton futures eased on Monday, weighed down by the weakness in grains market, although a softer dollar and concerns over the weather in top growing regions kept a floor on the natural fibre's prices.
Cotton contracts for December fell 0.09 cent, or 0.1percent, to 85.09 cents per lb, by 12:33 p.m. EDT (1633 GMT).
"The market is probably falling in sympathy with the grains markets," Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton, said, adding some weather issues are providing support at the 83-84 cents level. Chicago corn and soybean futures fell as US crops benefited from much-needed rains over the weekend while wheat prices also weakened. Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fibre crop in the US Delta region.
The dollar index slipped from a multimonth peak, making cotton affordable for holders of other currencies. "There are concerns that remain about the size of the US crop in 2021, with how many acres have been planted and on the flip side demand is still good overseas," Nunn said.
Market participants are now awaiting a weekly crop progress report by the US Department of Agriculture (USDA) later in the day and the planted acreage report due on June 30 for further clarity on the production outlook.
"How much rain Texas receives from now will be key to its production. What remains unchanged, however, is the continued strong pace of cotton demand from China," OCBC said in a note.
"Exports are likely to end in 2020/21 400k bales more than USDA expects, by our estimates, putting a strain on what looks like already a very tight balance sheet next year." The Spot Rate remained unchanged at Rs 12600 per maund. The rate of Polyester Fibre was increased by Rs 2 per kg and was available at Rs 207 per kg.
Copyright Business Recorder, 2021
Comments
Comments are closed for this article.