Weekly Cotton Review: Rate further declines as bearish trend continues

KARACHI: Cotton prices continued to decline in local and international markets. Cotton and textile sector is severely affected due to recession. There is an urgent need to arrange proper cotton seeds for the next season.

After China, now the US also needs to develop a positive strategy for providing agricultural technology and active cotton seeds for the promotion of agriculture.

The Chairman Pakistan Cotton Ginners Association has requested the government to take immediate notice of the crisis in the cotton trade and take steps to resolve the problems and difficulties faced by the cotton sector.

In the local cotton market, the price of cotton showed a bearish trend during the last week and the price fell by Rs 500 to Rs 1,000 per maund. Textile and spinning mills are cautious while ginners are eager to sell their stock. Business volume also remained relatively low. Due to the decline in the price of cotton in the international cotton markets, the needy mills are interested in booking cotton from the foreign countries. However, due to the severe recession in local and international textile sector, there is a crisis in all industries related to the cotton and textile sector.

Business is slow due to which there is panic like situation in all sectors. In textile mills, there is stock of cotton bought from local market and foreign countries at high prices. Besides, there is abundant stock of cotton yarn available due to which the financial crisis is further deepening.

The rate of cotton in Sindh is in between Rs 14,000 to Rs 17,000 per maund. The rate of Phutti is in between Rs 5,000 to Rs 7,500 per 40 kg.

The rate of cotton in Punjab is in between Rs 16,000 to Rs 17,500 per maund. The rate of Phutti in Punjab is in between Rs 5,000 to Rs 8,000 per 40 Kg.

The rate of cotton in Balochistan is in between Rs 16,000 to Rs 17,500 per maund while the rate of Phutti is in between Rs 6,000 to Rs 8,000 per 40 kg.

The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 500 pet maund and closed it at Rs 16,500 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman said that there was an overall decline in cotton prices in the international cotton markets, as well. The Rate of Future Trading of New York cotton for December delivery price stood at 72 US cents per pound.

According to USDA’s weekly export and sales report, the sales for 2022-23 were 68,400 bales including a decrease of 16,100 (-19%) bales. Pakistan was at the top by buying 53,200 bales. Vietnam bought 36,200 bales and was on second while Taiwan bought 15,500 bales and was on number third. Turkey bought 9,500 bales and stood at the fourth place. Ecuador bought 3,800 bales and was in the fifth place.

For 2023-24 7,100 bales were sold including increase of 2,700 (%61+).

Pakistan was on number one with 6,600 bales and Japan was on number second with 500 bales.

Due to heavy rains and devastating floods this year in Pakistan, the cotton crop has been irreparably damaged due to which there will be a shortage of active cotton seeds for the next season. Arrangements should be made to import active cotton seeds from foreign countries. In this regard, the news of the meeting of representatives of some ginners and seed companies with the American advisor is also circulating.

Apart from this, Federal Minister for Food Security and Research Chaudhry Tariq Bashir Cheema said that agricultural technology and seeds can be imported from America, as well.

If these policies are implemented immediately, then the benefits can be reaped by the time of sowing of cotton crop.

The Pakistan Cotton Growers Association (PCGA) has demanded the government take immediate notice of the crisis in the cotton trade and initiate steps to resolve the problems faced by the industry.

In a statement issued here on Friday, PCGA Chairman Chaudhry Waheed Arshad said without measures on war-footings, wheat cultivation will not be possible in the country, which may result in food shortage and food crisis.

The government should save farmers from major economic crisis through timely steps; he said and added that the process of cotton purchase by the textile sector has been stalled.

The ginning industry has stopped purchasing cotton as the textile sector is the sole and major buyer of ‘white gold’ and farmers have stopped picking cotton as the market mechanism is badly affected, PCGA Chairman informed.

The agriculture department is repeatedly issuing instructions to the farmers to cultivate wheat, while wheat cultivation is possible only when the farmers complete the sale of cotton and prepare the land for it, Chaudhry said.

Edible oil supply is also decreasing because the cotton seed is still in the field and last year also 7 billion dollars worth of edible oil was imported, he noted.

Moreover, due to lack of cotton seed crushing, its quality is deteriorating and livestock was being deprived of quality food. A major crisis has arisen as the entire supply chain and stakeholders are affected, he disclosed.

By now the sale of the cotton crop should have been completed and the fields should be ready for wheat cultivation, PCGA Chairman maintained.

The ginners are not getting the best quality cotton and the ginning factories have turned into warehouses of unsold cotton. The increase in stocks has stopped the process of new purchases as the ginners are not financially able to make new purchases due to the existing stocks of cotton, he concluded.

Copyright Business Recorder, 2022