KARACHI: The local cotton market continued its sluggish performance on Thursday with no change in the spot rate, which remained at Rs 11,000 per maund.
Naseem Usman, a seasoned cotton broker commenting on the situation said that the market was performing sluggish for the last two weeks when the new about importing cotton from India surfaced and dollar lost its strength. Though dollar regained again and the government also announced against the import from India, but the local cotton market is still bearish technically as some millers too stopped buying aggressively after these two factors.
He said that an encouraging report has been issued the other day by the US Department of Agriculture’s Foreign Agricultural Service said that Pakistan’s cotton production for marketing year 2021/22 is forecast at 5.3 million 480-pound (lb) bales, up 18 percent from the revised 2020/21 estimate, due to availability of new seed varieties, better pest and disease management, and government support.
“Pakistan’s cotton output still remains at historic lows, but to keep its textile mills humming it will continue to import large volumes of cotton. Marketing year 2021/22 imports are forecast to remain constant at 5.0 million 480-lb bales. Textile mill consumption is forecast slightly higher at 10.3 million bales, due to brisk milling activity under girded by strong government support policies for the country’s important textile industry,” the report added.
Meanwhile, a foreign news agency quoted that cotton futures rose on Wednesday supported by concerns that dry weather in West Texas, the largest U.S cotton-producing region, may weigh on U.S supplies of the crop.
Cotton contracts for May rose 0.54 cent or 0.7% to 79.76 cents per lb by 2:10 p.m EDT (1810 GMT). It traded within a range of 78.84 cents and 80.64 cents a lb.
The market is likely waiting for some further developments with cotton planting and weather, especially in West Texas, said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.
“You are basically seeing some consolidation (in cotton) ... until we settle over about 81.05 cents in that market - you’ll probably see lower to sideways trade,” Marcus added.
Also boosting sentiment for cotton were gains in the US corn and soybean markets.
“The May (cotton) contract should experience resistance near 81.00-82.00 and support near 77.00–78.00 over the near- to medium-term,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
Increased volatility and drought conditions in Texas could move December cotton futures into the high 80s or low 90s, Rose added.
Total futures market volume fell by 13,874 to 34,965 lots. Data showed total open interest gained 985 to 229,592 contracts in the previous session.
Another encouraging statement emerged from CPEC Authority Chairman Lt. Gen. ® Asim Saleem Bajwa who disclosed that China is supporting Pakistan to increase its cotton production by helping in research and providing latest state of the art machinery. He said that CPEC authority was willing to help Pakistani farmers in every sector especially cotton and textile as it has 8 per cent share in the national economy.
He was speaking at a meeting of a special committee on agriculture chaired by the Governor Punjab Chaudhry Muhammad Sarwar. The committee also recommended the government to increase the cotton support price to Rs 5,000 per maund and giving direct subsidy to the cotton growers.
Likewise, Pakistan Cotton Ginners Association’s Chairman Dr. Jasomal’s constituted Task Force Committee held meeting with the Zarai Taraqiati Bank’s officials and resolved to put in joint efforts for improved performance of cotton crop next season. Both organisations would convince the cotton growers to bring maximum area under sowing of cotton while they will be given mobile credit services and other technical guidance.
The Bank is extending loan to growers having land up to 12.5 acres on a nominal mark up rate of 2.5 per cent with 10 per cent subsidy. Growers can get loan for a period of 5-7 years while loan for fertilizer and pesticides is given for a year.
Naseem Usman said some media reports suggest that yarn prices have increased 7 to 10 per cent after refusal of import. Cotton’s rate in Sindh was in between Rs 10,200 to Rs 10400 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 Rs 10,500 per maund. The rate of Phutti in Punjab is in between RS 4,800 to Rs 6,300 per 40 kg.
Similarly, the rate of Banola in Sindh was in between Rs 1,600 to Rs 2,000 while the price of Banola in Punjab was in between Rs 1,800 to Rs 2,250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6,300 to Rs 6,400 per 40 Kg.
Again, Spot Rate remained unchanged at Rs 11000 per maund and Polyester Fiber was available at RS 215 per Kg, Naseem Usman highlighted.