KARACHI: Significant decrease of Rs 500 per maund witnessed in the local cotton market under influence of prevailing bearish trend in international cotton market and cautious buying by the textile and spinning sector.
The spot rate decreased by Rs 1100 maund. Such huge reduction in the spot rate during the two weeks was never witnessed in the history of Karachi Cotton Association.
The reason behind less trading volume is that ginners had left the stock of 1,000,000 bales.
Although, now ginners were trying to see their stock because the temperature is increasing due to this shortage in weight may increase. Keeping in mind ginners want to sell their stock but the mills were now more cautious. One reason behind cautious buying of mills is that rate of dollar reached at the lowest level of Rs 153. The currency dealers in the market were saying that it is expected that dollar may reach at the lowest level of Rs 143. The millers don’t want to take any risk in this situation.
Moreover, bearish trend was continuously witnessed in New York Cotton Market due to increasing trade conflict between China and America. China had cancelled already signed agreements of buying of 13000 to 14000 bales. The rate of New York Cotton reached at the lowest level of 77 American cents per pound. Experts were of the view that rate may decrease further.
Last Wednesday, Economic Coordination Committee has announced to import sugar and cotton yarn from India. But very next day during the meeting of Cabinet Committee, the ECC proposal was rejected. Such types of decisions damage the repute of the country. India is criticising the policies formulated in Pakistan. The day when ECC announced that cotton yarn and cotton can be imported from India, some Indian exporters started giving offers to the Pakistani importers but the next day tables were turned.
APTMA sources said that there is no need of importing yarn because local yarn is available in abundance. APTMA was also of the view that yarn can be imported from anywhere from open market but not from India because of the longstanding conflict between Pakistan and India on Kashmir issue. Now APTMA and Value Added sector are divided on this issue.
One reason may behind cautious buying by the mills is that rate of yarn comes down to some extent due to this textile mills are hesitant to buy cotton. As a result of this the rate of cotton cones down by Rs 500 to Rs 600 per maund. The cotton which was selling at Rs 11500 per maund was selling at Rs 11000 per maund. The cotton which was selling at Rs 11000 per maund after decreasing reached at the lowest level of Rs 10300 to Rs 10400 per maund.
In Sindh the rate of cotton after decreasing by Rs 500 to Rs 600 per maund reached at Rs 10200 to Rs 10500 per maund. The rate of Phutti which was available in very small quantity is in between Rs 4500 to Rs 5000 per 40 Kg. The rate of cotton in Punjab was Rs 11700 per maund after decreasing reached in between Rs 11000 to Rs 11200 per maund. The rate of Phutti was very low because almost all factories were closed; only few of them were functional.
The business of cotton was squeezing. The sowing of cotton for the next season has started in few areas of lower Sindh. The harvesting of wheat in Punjab will start from April 15 and after some time sowing of cotton will start in Punjab.
The Spot Rate Committee of the Karachi Cotton Association has significantly decreased the rate by 700 per maund and closed it at Rs 11200 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that bearish trend remained continued in international cotton market especially significant reduction was observed in the Rate of Promise (Waday Ka Bhao) of New York Cotton.
According to the weekly export report of USDA decrease of 71 percent was witnessed in the exports due to which the trade conflict between America and China is escalating. Other than that dollar is gaining in America due to which the rate of cotton is decreasing there. The rate of cotton is decreasing in Brazil, Central Asia and Argentina. The rate of cotton is also decreasing in India.
Chairman Pakistan Cotton Ginners Association Dr Jassu Mal Limani in its statement said that cotton should not be imported from India. He was of the view that this will affect our farmers. He said that farmers who were disheartened started thinking to cultivate cotton again when they saw that rate of cotton in Pakistan is increased and they can get the rate of Phutti from Rs 5000 to Rs 5500 per 40 kg.
He also said that import of cotton from India can affect our domestic production.
The cotton production in the country witnessed an alarming decline of 3 million bales, according to a report released by Pakistan Cotton Ginners Association. The report says that more than 5.645 million bales were produced in the country which is 3 million bales lees as compared to the last year’s production of 8.7 million bales.
According to the statistics released by Pakistan Cotton Ginners Association till April 1, more than 2.1 million bales were produced in Sindh while more than 3.5 million bales were produced in Punjab.
The local textile mills bought more than 5.4 million bales while the ginners had the stock of 85 000 bales. Only five ginning factories were partially functional. Pakistan Cotton Ginners Association had not prepared the report in 2020 so it is very difficult to compare the figures with previous year.
Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that this year production of cotton witnessed an alarming decline. He also said that if we compare this year’s cotton production with previous years it is lowest in thirty years.
Naseem said that partial sowing was started for the year 2021-22 in cotton producing areas of Sindh. According to the reports up till now the sowing in Sindh is satisfactory while the sowing in Punjab will partially start from April 15.
Copyright Business Recorder, 2021