KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Friday has increased the spot rate by Rs 50 per maund and closed it at RS 8850 per maund. The local cotton market remained stable on Friday. Market sources said that either there is a buyer of high quality cotton or low quality cotton in the market. However, here is hardly any buyer of mixed quality cotton.
Cotton Analyst Naseem Usman told that the Economic Coordination Committee of the Cabinet Wednesday approved removal of Additional Customs Duties (ACDs) and Regulatory Duties (RDs) on 169 selected HS Codes of textile sector, including fibers, yarns and fabrics of Nylon, Viscose, Acrylic, Rayon, Silk, Wool and vegetable-based fibers like Hemp, etc.
The summary was moved by Ministry of Commerce, after approval of the National Tariff Policy Board in its meeting held on August 24, 2020. According to sources in Finance Division custom duty and additional custom duty on 169 tariff lines was ranging from 2 to 16 per cent and 2 to 7 per cent respectively.
Naseem told that August 2020 was supposed to be the low point in Pakistan's external trade scorecard. Heavy monsoon rains across the country disrupted supply chain, with the destruction in Karachi particularly affecting the port activity.
As a result, monthly figures for both goods imports and exports have recorded double digit decline. Yet, textile group imports stand out, which recorded nearly 40 percent rise on a year-on-year basis. Why? Raw cotton imports.
As per PBS Advance Releases, Pakistan recorded its highest ever raw cotton import bill for the month of August (on a seasonal basis) this year. In fact, raw cotton import volume during the month was 12.5 times higher than same month last year and 3.5 times higher than average August imports over the last decade!
Naseem told that the cotton crop has disappointed - yet again. A phenomenon reminiscent of the outgoing decade, which saw the sweet lure of sugarcane almost singlehandedly shave off a fifth of cotton's cultivated area, translating into a 29% drop in yield. But volumes - and a palpable substitution - do not tell the full story. They do not even provide an unequivocal account of cotton's relegation in the agronomic pecking order.
The substitution and dwindling yield are far from an inexplicable trajectory, however, and represent unmistakably inevitable developments as structural characteristics of cotton cultivation in the country have gradually but definitely facilitated its waning economic appeal for farmers.
The low quality of cotton yield in Pakistan was an impending feature of the textile value-chain even before the crop substitution to sugarcane began. Pakistan, in fact, suffers from one of the worst contamination rates in the world with its rate more than seven times the international standard. One of the primary reasons for this is the out-dated and ineffective picking methods that structurally induct high trash content into the value-chain and directly lead to amplified ginning losses and lower quality of yarn.
Another reason for cotton's dwindling quality output is the below-par pace of seed research. Naseem Usman told that according to the statistics released by Pakistan Cotton Ginners Association till September 15, 2020 10 lac 35 thousand bales were produced in the country which is 44.12% less as compared to the last years cotton production of 18 lac 52 thousand bales.
He also told that textile imports will further increase as a result of which country's economy will further deteriorate. According to the first estimate released by Agriculture Crop Reporting Service, the sowing of cultivated area during 2020-21 season witnessed a decline of 12.0 % owing to major reason behind this was non availability of good quality of seeds. The reason monsoon spell had caused huge loss in Sindh especially in the districts of Sanghar, Mirpurkhas, Umer Kot, Badin, Tando Allah Yar, Tando Muhammad Khan, Hyderabad and Dadu.
The report indicated that 25% cotton crop in Sindh has been damaged quality and supply of seed cotton was affected. Picking was also effected due to rains. Similarly, the rains in cotton belt of Punjab have caused loss to cotton crop. The high moisture makes the cotton crop susceptible to Pink boll worm attacks. The pink boll worm attacks can damage around 20 to 30 percent of the crop and affect the lint quality. The farmers are advised to immediately drain out water from their fields.
He also told that this year due to torrential rains, unsuitable weather conditions, corona lockdown and especially due to the substandard seeds cotton production was badly effected. Amid coronavirus cases increasing in competitor economies including India and Bangladesh, garment orders are rapidly shifting to Pakistan.
Moreover, ICE cotton futures edged higher on Thursday, after touching a two-week low earlier, as the dollar retreated and unfavourable weather in major crop-growing regions in the United States supported prices. Cotton contracts for December settled up 0.21 cent, or 0.3%, at 65.46 cents per lb, after earlier touching their lowest level since Sept. 11.
The dollar has reversed course and there are also some rains all over the delta, said Louis Barbera, partner and analyst at VLM Commodities LTD.
He also told that 1000 bales of Shahdadpur were sold at Rs 8175 to Rs 8400, 1800 bales of Tando Adam were sold at Rs 8200 to Rs 8500, 1200 bales of Sanghar were sold at Rs 8150 to Rs 8300, 800 bales of Hyderabad were sold at Rs 8175 to Rs 8250, 1000 bales of Khairpur were sold at Rs 8750 to Rs 8800, 800 bales of Saleh Put were sold at Rs 8800 to Rs 8900, 1000 bales of Rahim Yar Khan were sold at Rs 9100, 600 bales of Haroonabad were sold at Rs 9075 to Rs 9100, 200 bales of Bahawal Nagar, 200 bales of Chistian were sold at Rs 9100, 1000 bales of Fort Abbas were sold at Rs 9000 to Rs 9050, 400 bales of Faqeerwali were sold at Rs 9000 to Rs 9050, 200 bales of Ahmedpur Ease, 400 bales of Burewala, 200 bales of Mianwali were sold at Rs 9000, 400 bales of Gojra were sold at Rs 8900 to Rs 9000, 200 bales of Layyah were sold at Rs 8850, 600 bales of Chichawatni were sold at Rs 8850 to Rs 8900, 400 bales of Khaneawal were sold at Rs 8900, 600 bales of Mian Channu were sold at Rs 8850 to Rs 8900, 600 bales of Vehari were sold at Rs 8600.
He told that rate of cotton in Sindh was in between Rs 8300 to Rs 8800. The rate of cotton in Punjab is in between Rs 8700 to Rs 9175. He also told that Phutti of Sindh was sold in between Rs 3500 to Rs 4100 per 40 kg. The rate of Phutti in Punjab is in between Rs 3600 to Rs 4500 per 40 kg.
The rate of Banola in Sindh was in between Rs 1500 to Rs 1650 while the price of Banola in Punjab was in between Rs 1650 to Rs 1750. The rate of cotton in Balochistan is in between Rs 8650 to Rs 8750 while the rate of Phutti is in between Rs 4300 to Rs 4900.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 50 per maund and closed it at RS 8850 per maund. The polyester fiber was available at Rs 153 per kg.
Copyright Business Recorder, 2020
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