KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Saturday has decreased the spot rate by Rs 300 per maund and closed it at Rs 11900 per maund.
The trend in the local cotton market remained satisfactory on Friday. Market sources said that trading volume was low. Cotton Analyst Naseem Usman told that India, the largest producer of cotton, is yet to cash in on US ban on imports of the yarn from China. The reason is the price rise in the domestic market.
A US ban on Chinese cotton along with an increase in demand for the yarn from Beijing has pushed domestic prices. Not only is this impacting export, but domestic users including apparel manufacturers are also reeling under pressure. Earlier, many projected a “much higher cotton exports” from India after the US ban.
“Indian cotton is no longer the cheapest in the world as price of our cotton has increased from Rs 38,000 per candy of 356 kg each to Rs 41,500, while the international prices have declined by about 4 per cent,” the Economic Times quoted Atul Ganatra, president Cotton Association of India (CAI) as saying.
The CAI revised export estimates downward by 10 per cent to 5.4 million bales of 170 kg for the current financial year downward by 10 per cent. In the previous year, India exported of 5 million bales of 170 kgs. In early January, price of raw cotton touched Rs 5,700 a quintal against the minimum support price of Rs 5,515 fixed for this season. In addition to price rise, resurgence of the deadly coronavirus also has hit exporters’ prospects. Earlier, the US banned imports of Chinese cotton due to human rights violations against Uighur Muslims in the Xinjiang region.
Sources said that the industry must focus on maintaining the right price. “If you look at rice, pricing has helped India take advantage of the current situation and we have become the largest supplier of the grain in the world. But in case of cotton, we are facing a handicap,” an analyst on condition of anonymity said.
In January, the U.S. government banned imports of cotton and other raw materials from China’s autonomous region of Xinjiang. These measures come in response to allegations of forced labor in the region, as multiple reports have detailed how Uighurs and other Muslims have been held in internment camps and forced to work under inhumane conditions. On Jan. 19, outgoing Secretary of State Mike Pompeo labelled China’s actions in Xinjiang as genocide, citing widespread reports of torture, forced sterilization and restrictions on freedom of religion and expression.
Given the gravity of these allegations, prominent apparel brands such as Patagonia, Marks & Spencer and H&M have cut ties with suppliers in the region, and other apparel brands will probably follow suit. How will these efforts affect global sourcing and labour issues within the fashion industry
Cotton Analyst Naseem Usman told that as per media reports traders had stopped trading in the biggest yarn market of Asia has stopped selling cotton and yarn due to sky rocketing high prices. It is feared that looms may stopped their operations.
Cotton gained for a ninth straight session on Wednesday, hitting a 2-1/2-year peak on hopes that demand for the natural fibre would rise as the global economy recovers, while supplies remain limited.
Cotton contracts for May rose 0.64 cent, or 0.69% at 93.31 cents per lb, at 12:15 p.m. ET (1715 GMT). It traded within a range of 92.14 and 93.63 cents a lb, which was their highest since early June 2018.
“We are still looking at relatively tight supplies and a reduction in the carryover... that’s how you get bullish markets,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.
Prices are certainly not going down to discourage US acreage and part of that is due to dryness in some regions, Love said, adding that an upbeat grains and stock markets also encouraged speculators to pick-up cotton.
US corn and soyabean futures rose on Wednesday as storms in major production areas of Brazil disrupted fieldwork, which threatened to slow export shipments from one of the world’s major suppliers.
Cotton Analyst Naseem Usman told that as ginning factories turn off their machines for the season, the marketing year 2020-21 will probably be remembered as the worst ever in half century. Almost all of cotton production this year has already arrived at the doors of ginning units, all except the Cotton Crop Assessment Committee are persuaded that annual output will stay shy of 6 million bales (of 170 kg), let alone the ‘considered’ forecast of 7.7 million bales.
Meanwhile, Pakistan imported 5 million bales of ‘cotton, carded or combed’ during CY20, another well-anticipated first. What’s comforting is that average unit price of imports clocked in at $1.63 per kg, only nominally higher (3 percent) than monthly average rate of Cotlook A index during the calendar year. What’s concerning, however, is the sharp rise in international cotton prices since April 2020. Cotton spot prices in February 2020 are not only 40 percent higher than the levels they crashed to at the height of pandemic last year, but they are also 14 percent higher on year-on-year basis. In fact, Cotlook A index is at highest in 30 months, raising alarms over how long before spinners’ forward buying gives in and creates a cost spiral for domestic textile value chain.
All Pakistan Textile Mills Association (Aptma) has rejected proposal of allowing import of cotton yarn from India and said that there is no shortage of yarn in the country.
Zahid Mazhar, Senior Vice Chairman Aptma, while commenting on the statements of some of trade bodies has said that their narrative is not based on facts and they are misleading the government and the authorities concerned as there is no shortage of cotton yarn in the country.
He said that allowing import of cotton yarn from India would create a crisis for the spinning industry of Pakistan and lead to closure of spinning mills, on the other hand, it will strengthen the economy and the spinning industry of India.
He highlighted that India has been violating all the resolutions passed by the UNO and other international organizations and has occupied Kashmir and the people of Kashmir have not been given their legitimate right of living independently. Allowing Indian yarn would be like adding insult to their injuries, he added.
Mazhar pointed out that during the period from July 2020 to December 2020 as per the data released by Pakistan Bureau of Statistics; total production of cotton yarn was 1,715,665 tons compared to the corresponding period of last year when 1,714,175 tons was produced in the country.
Meanwhile, Zahid Mazhar, Sr. Vice Chairman, All Pakistan Textile Mills Association (APTMA) has out rightly rejected the statements appearing in the media from Pakistan Hosiery Manufacturers Association and Pakistan Textile Exporters Association regarding the so called shortage of yarn in the country and their proposal of allowing import of Cotton Yarn from India.
Naseem Usman told that 200 bales of Rahim Yar Khan were sold at Rs 11875 per maund, 200 bales of Multan were sold at Rs 11700 per maund and 200 bales of Tunsa Shareef were sold at Rs 11000 per maund.
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4000 to Rs 5900 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4000 to Rs 5900 per 40 kg.
The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 12000 per maund.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 300 per maund and closed it at Rs 11900 per maund. The Polyester Fibre was available at Rs 210 per Kg.
Copyright Business Recorder, 2021