KARACHI: The bearish trend continues in the rate of cotton. Due to the fear of COVID19 textile mills are avoiding to buy both local and imported cotton. There is no practical strategy to increase the cotton crop- "Now or never." If Cotton growers started taking interest in other crops, it will be impossible to bring them back.
In the local market during the last week textile and spinning mills were involved in cautious buying and ginners were also taking interest in selling of cotton on any rate due to which the trading volume remained positive. However, the rate of cotton witnessed a decreasing trend and the rate of cotton decreased by Rs 200 to Rs 300 per maund. Textile and spinning mills are taking interest in buying, keeping in mind the demand during the expected second wave of COVID. ON the other hand the import of cotton was also restricted due to which it is difficult to determine the direction of market.
Prime Minister Imran Khan has announced incentives for energy sector. The positive impact of these incentives has started emerging. Especially, in Faisalabad which is the hub of textile sector textile mills have started resuming their operations. The power looms which were off have started their operations. There is a shortage of around 2 lac textile and power loom workers. It is said that the textile sector has been revived like 1990's. Due to this news, if the demand for cotton in the local cotton market increased, the flow should have increased, but the opposite is happening.
According to the importers of cotton up till now textile and spinning mills have signed agreements for the import of 30 lac bales of cotton. If the dollar falls further, it will be beneficial for cotton importers. However, according to the sources of All Pakistan Textile Mills Association due to the alarming decline in cotton production in the country this year, textile mills will have to import about 50 lac bales of cotton of worth three billion dollars to meet their needs. Up till, now rupee is strengthening against dollar. There is a possibility that in coming day's dollar will come at the lowest level of Rs 155. But on the other hand, the depreciation of the dollar will have a negative impact on the export of textile products.
The rate of cotton in Sindh is in between Rs 8400 to Rs 9400per maund. The rate of Phutti is in between Rs 3000 to Rs 4200 per 40 Kg. The rate of cotton in Punjab is in between Rs 8900 to Rs 9500 per maund. The rate of Phutti is in between RS 3600 to Rs 4600 per 40 Kg. The rate of cotton in Balochistan is in between Rs 9000 Rs 9100 per maund while the rate of Phutti is in between RS 4500 to Rs 5000 per 40 Kg.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 200 per maund and closed it at Rs 9400 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that mixed trend was witnessed in international cotton market. The Rate of Promise (Waday Ka Bhao) of New York Cotton increased by 71 cent after the coming of news of vaccine of COVID19 but after that the rate of cotton after falling drastically closed at 68.46 per pound.
The rate of cotton was not increased despite of the fact that USDA weekly export report shows an increase of 30 %. Although, Pakistan was the biggest importer of American cotton this time also. The rate of cotton remained over all stable in Brazil, Argentina and Africa but a slight increase was witnessed in the rate of cotton in India.
Naseem Usman told that drastic decrease was witnessed in the production of cotton during this season. It looks that concerned government was not aware of this.
Experts say that if a positive strategy is not evolved for next year's crop and if availability of quality seeds are not managed, the situation will get worse next season because most cotton growers are badly affected and will be reluctant to plant the cotton crop which will be a huge blow to Pakistan's already suffering economy because Pakistan has to import cotton of worth 3 billion dollars to full fill it's needs.
In the last week review we wrote that it looks that concerned government departments were not interested in increasing the production of cotton in the country. The people related to cotton business are of the view that if the situation remained like this then cotton growers started taking interest in other crops and then it will be not only difficult but impossible to attract them back to the cotton crop. It looks that stake holders and the government are not on the same page regarding increasing the production of cotton in the country.
Federal Minister for National Food Security Syed Fakhar Imam said "We are not able to produce good quality seeds but we will not import seeds". There is a permission to import cotton, cotton yarn, comber and cloth.
Advisor to Prime Minister on Commerce Abdul Razak Dawood said "We will not fix the support price of cotton it will affect exports". Cotton farmers are saying that we are not getting good quality seeds and pesticides then why we should grow cotton crop on loss.
While All Pakistan Textile Mills Association is of the view that we will import cotton if there is shortage in the country due to low production. Ironically Prime Minister Imran Khan said that nations were not build by selling cotton and clothes. If Imran Khan had any idea regarding importance of cotton he should allocate some amount in the last year announced package of Rs 331 billion. No body knows where the amount of agricultural package was spent.
While according to some dealers of cotton seed producers there is no need to worry. They are producing low quality seeds by buying low quality Banola seeds on high rates. The dealers who were involved in selling fake pesticides were sent to Bangkok and Baku but this year they will be sent to Europe and America for vacations. According to the experts cotton is being treated like orphan.
There is a ray of hope that Prime Minister Imran Khan had asked Group leader All Pakistan Textile Mills Association Goher Ejaz to constitute a cotton task force. Big five textile groups were included in the task force. It is a positive sign that private sector is showing interest in increasing the production of cotton in the country. It is hoped that cotton production may increase in next five to six years. It looks that no one was sincere with the cotton including farmers, traders of Phutti, ginners and textile mills owners. Cotton brokers, especially mobile cotton brokers were responsible for destroying the business.
The people, who were involved in estimation process of cotton production, should gave new estimates of production area of cotton after conducting surveys at district level. They gave estimates by sitting in the air conditioned rooms which proved wrong for many years. Naseem Usman said that we should think positive but some positivity should be seen on the ground. Efforts should be made for the production of good quality cotton seeds according to our environment.
Meanwhile, according to the information received, due to re lock down in United States and Europe due to the threats of second wave of COVID 19 export orders for denim and garments are partially falling apart again although the situation of orders of home garments is a little bit better.
Copyright Business Recorder, 2020