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KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Thursday has increased the spot rate by Rs 50 per maund and closed it at Rs 9300 per maund.

The local market remained bullish on Thursday. Market sources told that mills were taking interest in buying due to which the trading volume remained satisfactory.

Cotton Analyst Naseem Usman told that according to the data released by USDA till November which shows that there is no chance of bullish trend in the market in near future.

The country's top export - textile sector on Wednesday sought the government's priority towards the increase of a sizeable cultivation area of cotton crop and its output growth to safeguard the local yarn market.

Pakistan's entire apparel textile sector relies widely on the local cotton production and manufacturing of yarn to meet its global orders, makers and exporters said.

"Due to decline in cotton production, the production of value added textile sector has suffered a lot owing to unavailability of yarn," Muhammad Javed Bilwani, the Chairman, Pakistan Apparel Forum, said.

Bilwani said textile exporters have urged the government to pay attention to cotton production, cultivation area and cotton yield in order to support the value-added textile chain as cotton and cotton yarn are basic raw materials for its survival and development.

Owing to a decline in cotton harvest, the production of value-added textile sector has suffered due to unavailability of cotton yarn, and textile exporters are hesitant to finalise new export orders.

Naseem told that cotton was always considered to be a resilient and reliable lifeline of Pakistan's economy; however, the reduction in its productivity over several years has negatively impacted the performance of entire textiles sector. Pakistan is fifth largest cotton producer in the World and accounts for 6 percent market share in overall production.

Over the last 10 years, cotton production has shrunk by 50 percent from 14.81 million bales to under 7.5 million bales (forecast this year) and as a result Pakistan's Textile Sector and economy has suffered considerable losses.

The production shortfall has forced the entire value chain to rely on imported cotton, to meet this shortfall with import expenditure of over 5 billion dollars (from FY16 to FY20) on cotton imports in order to meet the demands of the domestic Textile industry. The deficit for FY21 will require an additional $2 billion for cotton imports.

Importance of the cotton crop can be gauged from the fact that its share of agricultural GDP is 4.1 percent and in overall GDP is approximately 0.8 percent. Other bye products are Cotton seed with a significant contribution for local oil production and of cotton cake that improves milk production.

Cotton being the basic raw material for the roughly 400 textile mills of Pakistan, which earn 60 percent foreign earnings and contribute 8.5 percent in GDP; accounts for almost 70 percent of the basic cost and therefore any movement in price or quantity of cotton has significant impacts on production and the farmer's revenue. Farmers' decisions are subject to the relative cost of production from the competing crops, government support and input availability.

Importance of new seed technology can be assessed from the fact that Pakistan is losing at least $2 billion directly and at least $8 billion USD per annum on account of low production of cotton. Increase in cotton production will have a direct impact of $1 billion per 1 million bales and a 7 times multiplier impact on the fiscal flows in economy. A normal cotton crop provides livelihood and employment to millions of the poor families and goes a long way in the struggle to fight off poverty as it distributes money against the very poor rural population.

The low profitability of cotton farmers is entirely due to the falling productivity as cotton in Pakistan is already priced at levels above international parity.

Meanwhile, the cotton production in the country witnessed an alarming decline of 2.8 million bales says a report release by Pakistan Cotton Ginners Association. The report says that more than 4 million bales were produced in the country which is 41.47% less as compared to more than 6.8 million bales produced till November 15 last year.

According to the statistics released by Pakistan Cotton Ginners Association till November 15 local textile mills bought more than 3.1 million bales which is around 40.56% less as compared to the last year buying of more than 5.2 million bales during this period. The ginners had the stock of 800,000 bales which is 43.20% less as compared the last year stock of more than 1.5 million bales.

Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that as per the statistics of the report this year 5.5 million bales will be produced in the country adding that around 7 million bales will have to be imported to fulfil the demands of the local industry.

Chairman Pakistan Cotton Ginners Association Dr Jasomal Limani told Naseem Usman told that major reasons, behind low production of cotton this year is non availability of good quality seeds, substandard pesticides and to some extent climate change.

Jasomal also said that he talked to federal minister for Industries Hammad Azhar and federal minister for National Food Security Syed Fakhar Imam regarding alarming decline in the cotton production. Both the ministers assured that they will play their role regarding giving incentives to the farmers. They also assured that import duty on pesticides will be reduced.

Dr Jasomal stressed on the need of introducing efficient technology and called for ensuring availability of quality seeds and good quality pesticides.

Naseem told that 200 bales of Ghotki were sold at Rs 9350 per maund, 200 bales of Mirpurkhas were sold at Rs 9300 per maund, 400 bales of Sarhad were sold at Rs 9250 per maund, 400 bales of Panu Aqil were sold at Rs 9200 per maund, 600 bales of Badin were sold at Rs 8600 per maund, 1000 bales of Khairpur were sold at Rs 8500 to Rs 8600 per maund, 600 bales of Khanewal were sold at RS 8700 to Rs 9550 per maund, 1200 bales of Rahim Yar Khan were sold at Rs 9350 to Rs 9500 per maund, 1000 bales of Haroonabad were sold at Rs 9400 to Rs 9450 per maund, 400 bales of Mianwali, 800 bales of Fort Abbas, 1200 bales of Chani Goth, 400 bales of Marrot were sold at Rs 9400 per maund, 1800 bales of Alipur were sold at Rs 9200 to Rs 9375 per maund, 200 bales of Liaquatpur, 600 bales of Sadiqabad, 200 bales of Nurpur Nuranga were sold at Rs 9350 per maund, 400 bales of Shehar Sultan were sold at Rs 9200 per maund, 200 bales of Dera Ghazi Khan were sold at Rs 9150 per maund and 200 bales of Layyah were sold at Rs 9000 per maund.

He told that rate of cotton in Sindh was in between Rs 8400 to Rs 9200 per maund. The rate of cotton in Punjab is in between Rs 8800 to Rs 9400. He also told that Phutti of Sindh was sold in between Rs 3300 to Rs 4200 per 40 Kg. The rate of Phutti in Punjab is in between Rs 3700 to Rs 4600 per 40 Kg.

The rate of Banola in Sindh was in between Rs 1600 to Rs 1750 while the price of Banola in Punjab was in between Rs 1500 to Rs 2200. The rate of cotton in Balochistan is in between Rs 9000 to Rs 9100 while the rate of Phutti is in between Rs 4000 to Rs 5000.

The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 50 per maund and closed it at Rs 9300 per maund. The Polyester Fiber was available at Rs 158 per Kg.

Copyright Business Recorder, 2020