KARACHI: Stable trend was again witnessed on the local cotton market on Thursday, dealers said. Market sources said that trading volume was thin.
Sources told that reason behind thin trading volume is shortage of yarn as well as fluctuation in the rate of dollar.
Cotton Analyst Naseem Usman told that the cotton production in the country witnessed an alarming decline of 34.16 percent as compared to corresponding period of 2020 when arrivals comprised over 8.5 million bales.
According to the statistics released by Pakistan Cotton Ginners Association till March 15, over 5.643 million bales were produced in the country which is 2.927 million bales less as compares to the last year’s production of over 8.5 million bales during this period.
ICE cotton futures edged down on Wednesday as favourable weather in the cotton growing regions of the southern United States is expected to help the crop, while investors were awaiting a federal export sales report.
Cotton contracts for May settled down 0.41 cent, or 0.5%, at 86.51 cents per lb. It traded within a range of 86.22 and 87.54 cents a lb.
“The weather is getting better in the (US) south with a lot of rains so, there is going to be excellent planting conditions once spring rolls up,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
However, the dollar was down 0.4% against key rivals, limiting some downside in cotton prices. A weaker dollar makes greenback-denominated cotton cheaper for investors holding other currencies.
Chairman of National Business Group and President Pakistan Businessmen and Intellectuals Forum (PBIF), Mian Zahid Hussain has said that the textile policy has been delayed by three years therefore new policy should be announced without delay and yarn should be provided to the value-added sector at an affordable price so that it remains competitive in the international market.
He said that exports are dipping while imports are swelling which will bring the external sector under pressure. Exports fell by 4.5 percent during the month of February as compared to the last year from 2.14 billion dollars to 2.044 billion dollars, he said.
Mian Zahid Hussain said that apart from overall exports, the critical textile sector exports also fell by 3.12 percent from 1.27 billion dollars to 1.23 billion dollars which has raised concerns.
He said that fall in exports is due to the increased cost of doing business including energy prices, delay in repayment of refunds and swelling cost of inputs. He said that the value-added sector has recorded a decline due to the cost of yarn which could have been avoided by allowing import of cotton and yarn from India, the cheapest source of raw material for Pakistan.
Cotton Analyst Naseem Usman told that as imports soar and exports dip, one cannot help the unsettling feeling that the trade balance will be thrown out of whack again. Besides imports spiraling, shrinking exports mean shrinking textile exports that continue to make up over 60 percent of the total exports. The bust in the textile sector has been highlighted in this space earlier (Read: Textile boom – is the bust nearing?) and its glimpse can be seen in the latest detailed trade data by Pakistan Bureau of Statistics (PBS).
Though textile exports in value term during 8MFY21 increased by 6.7 percent year-on-year against a growth of 4.4 growth percent in total exports during the period, textile exports in February 2021 alone have seen a dent. Total textile export in February declined by 3.1 percent year-on-year, and by 6.7 percent month-on-month.
Meanwhile, an increase of nearly 36 percent in cotton yarn export in February 2021 triggered panic among the apparel makers, who seek a complete ban on the commodity’s export.
Cotton yarn export grew by 35.86 percent in terms of volume during February 2021, Pakistan Apparel Forum chairman Muhammad Jawed Bilwani said on Wednesday.
He said that the rising volume of export of cotton yarn had deteriorated apparel sector’s growth as the country continued to face energy shortage.
“The value added products of knitwear, bedwear, towel and readymade garments have witnessed a decline of 26.14, 7.35, 11.36 and 0.42 percent respectively in February 2021 compared to January 2021,” Bilwani said.
Instead of exporting the essential raw material, it could be converted into high value-added products like garments to help the country earn foreign exchange and generate more employment, he said.
In the wake of the “severest” shortage of cotton yarn, the government should immediately place a ban on export of cotton yarn, he said.
It may be noted that representatives of provincial governments on Wednesday suggested federal government to timely announce support price for cotton to encourage the farming community to bring the maximum land under cotton production.
An official said that provincial government representatives said this during a meeting which was presided over by federal minister for national food security and research Syed Fakhar Imam and also attended by ministers and secretaries of agriculture from all provincial government.
The official said that the meeting was informed that due to declining cotton production in Sindh out of 341 cotton ginning factories, only about half were functioning. It was suggested by the Sindh provincial agriculture ministry that a sum of Rs 3 billion was estimated for the revival of cotton crop in Sindh in terms of research, genetic engineering amongst other services for the farmers.
He said that Punjab’s agricultural ministry’s representative pointed out the need for streamlining the availability of pesticide, availability of improved variety of seeds and the area-wise identification of varieties at hand. The secretary ministry of agriculture Khyber Pakhtunkhawa said that DI Khan in Khyber Pakhtunwa cultivates cotton and incentives for cultivation to cotton farmers was the need of the hour, he said, adding that ginning mills should be set up in province to increase cotton cultivation following the model of sugar mills to increase production of sugar cane.
Official said that Director General (DG) agriculture Balochistan said that 17 districts of Balochistan were producing cotton while four districts in Balochistan were producing organic cotton. The Balochistan government will sign memorandum of understanding (MoUs) with various companies to support the production of non-GMO cotton seeds, he said.
Imam told the meeting that there were three major varieties of cotton seed available. As many as 23000 tons of certified cotton seed was available with a germination percentage of 75 percentages as compared to a 47 percentage germination rate last year. Punjab seed council has introduced 17 new varieties including a double-gene variety whereas Sindh has introduced three varieties, he said.
The federal minister said that cotton growers would soon be given special incentives by the federal and provincial governments in the form of cotton-specific subsidies.
He said that Punjab Seed Council has introduced 17 new varieties, including a double-gene variety, whereas Sindh has introduced three new varieties.
Cotton growers will be given subsides on pesticides for whitefly and pink bollworm, as well as on cotton seed. It will be ensured that the subsidies reach the farmers and do not get lost in the middle,” he added.
In addition, he said, subsidy on tractors, loan markups and fertilizers would also be announced for the farmers’ community in general. He advised against the mixing of cotton varieties “as it lowers the quality of cotton”, and also stressed on reducing the trash content in cotton that can lead to lower profitability.
He further advised district-wise monitoring of cotton growth and said that a total of 6 million bales of cotton were expected to be grown this year.
Naseem told that 400 bales of Feroza were sold at Rs 12000 per maund and 200 bales of Chani Goth were sold at Rs 12500 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 4500 to Rs 5100 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 4800 to Rs 6300 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 rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
The Spot remained unchanged at Rs 12300 per maund. The Polyester Fiber was available at Rs 220 per Kg.
Copyright Business Recorder, 2021
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