KARACHI: The rate of cotton remained stable. According to the USDA report there is an increase of 45% in the exports while according to World Agricultural Supply and Demand Estimates (WASDE) internationally the production of cotton decreased by 22 lac bales and demand increased by 15 lac bales. Due to this there is an increase in the rate of New York Cotton and under the influence of increase in the rate of New York Cotton bullish trend was witnessed in international markets. No strategy is seen in the country regarding increasing the production of cotton in the country. Organic cotton is being promoted in Balochistan.
In the local cotton market during the last week textile and spinning sector continued buying while the ginning factories showed their interest in selling. Ginners were stocking good quality cotton because of increase in the rate of cotton due to the low production. The ginners had bought Phutti on high rates. They are also waiting that when rates will be increased.
Overall, the rate remained stable while trading volume remained satisfactory. The Phutti is continuously arriving in some areas. It is estimated that production of cotton this year will be around 55 to 60 lac bales. There is consensus among stake holders that there is not much fluctuation in the rate and for the last one month the rate remained stable.
The textile mills are steadily buying cotton as per their needs. Big textile groups had signed agreements for the import of cotton in abundant quantity and there delivery had also started and they had to clear the payments due to this they were involved in cautious buying in the market. This time it is witnessed that big groups were refraining themselves from buying local cotton while some bought it in very limited amount while majority of them bought half of the cotton of their need from the local market and the remaining had signed import agreements.
This year, local mills have received large import orders from foreign countries, especially from the UK and USA, which may increase the demand of cotton of local textile mills as compared to previous years.
In the first wave of COVID 19 closure of mills due to the locked down mills had the stock of cotton and cotton yarn however, despite that textile mills will buy more than one crore 40 lac (14,000,000) bales of cotton. In this way if locally 55 lacs to 60 lacs bales will be produced then a huge quantity of cotton will be imported from abroad. Even now, the mill owners think that the second wave of COVID 19 is gaining momentum and if the situation has not improved then it is feared that again lock down will be imposed in USA and UK which will affect the business that is why they are so cautious. Currently, textile sector is passing through good condition.
The rate of cotton in Sindh is in between Rs 8600 to Rs 9000 per maund. The rate of Phutti is in between Rs 3200 to Rs 4400 per 40 Kg. The rate of Khal and Banola is under pressure.
The rate of cotton in Punjab is in between Rs 8800 to Rs 9600 per maund. The rate of Phutti is in between Rs 3500 to Rs 4800 per 40 Kg. Limited stock of six to seven thousand bales of cotton in Balochistan were available in between Rs 8600 Rs 9200 per maund while Phutti which is in very small quantity available at the rate of RS 4000 to Rs 5200 per 40 Kg.
According to the ginners despite low crop this year the prices of khal and Banola were not increased as it is expected. One reason behind is that ginners and oil mills were mixing other items in Khal while animals were not eating Khal which was wet due to rains.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 50 per maund and closed it at Rs 9400 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all rate of cotton remained stable in international markets. According to the USDA weekly export report exports were increased by 45 % due to which the Rate of Promise (Waday Ka Bhao) of New York Cotton after increasing reached at 74.32 American cents which is highest in 20 months. This time too Pakistan and China are biggest importers. However, fear of corona decreased to some extent due to which trading volume improved it is hoped that it will improve further.
Moreover, according to the USDA World Agricultural Supply and Demand Estimates report the rate of cotton remained stable in Brazil, Argentina and Central Asian states. Fluctuation was seen in the rate of cotton in India. According to the information received from India it is expected that production of cotton will be around 3 crore 70 lac bales while exports will be around 70 lac bales as compared to the last years export of 50 lac bales around 20 lac bales more.
Cotton Corporation of India buys cotton to ease the burden of cotton growers in India. It also plays an important role in increasing the production of cotton in the country. In India the support price of cotton is also fixed and incentives will be given to the cotton growers. On the other hand in our country support price of cotton is not fixed; substandard pesticides will be given to farmers, and cultivating land of cotton is also decreasing.
Cotton growing areas in India are divided into districts and cotton is sown according to the climatic conditions there while in Pakistan for years, only BT quality cotton has been cultivated in Pakistan which has lost its usefulness. Every year there are many claims that the government's seed corporation has produced standard seeds but they are also substandard while substandard pesticides are provided as a result, cotton production has dropped from 15 million to just five million bales.
Experts believe that if steps were not taken on war footings to increase the production of cotton this year then it is feared that production of cotton will decline further. If positive steps are not taken now for the next season, the cotton crop in the country will gradually become extinct and we will have to rely on abundant imports from abroad. The cotton growers were discouraged and have started taking interest in other crops.
If efforts are not made to increase cotton production, it will not be difficult or impossible to bring cotton growers back to cotton production. We have repeatedly warned government officials that if efforts are still not made to increase cotton production, cotton production will decline. Once cotton growers have started taking interest in other crops, it will be difficult to bring them back to cotton farming.
Meanwhile, in order to promote organic cotton production in Balochistan, a meeting of Organic Cotton Working Group was held in Quetta on Wednesday under the chairmanship of Balochistan Agriculture Minister Engineer Zamrak Khan Achakzai in which all stakeholders were invited.
Project director CAPAS Babar Latif told Naseem Usman that cotton growers of Lasbella and Barkhan will be provided Non BT seeds of seeds. The land of Balochistan is virgin which will be helpful in increasing the production of organic cotton. The country's textile industry will benefit and will be able to get higher prices in international markets.
Copyright Business Recorder, 2020
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