LAHORE: Performance of local cotton market on Saturday was the same as it experienced throughout the week. Activities were negligible, bearish trend and spot rate same as was on Friday.
Seasoned cotton broker, Naseem Usman commenting on the performance of the cotton market said that there seemed to be no activities in the market because of lackluster interest of the stakeholders.
Commenting on the next cotton season, Naseem said that the Federal Committee on Agriculture (FCA) has fixed cotton production target 10.50 M bales (170 kg) for cotton year 2021.22, showing an increase of 1.7 per cent over the last year. The decision was taken at the FCA meeting which set production targets for Kharif crops for the next year. The same meeting set the rice production target at 8.2 million tonnes and sugarcane at 74.84 million tonnes.
Cotton will be sown on an area of 2.33m hectares, rice over 3.07 m hectares and sugarcane on 1.18m hectares.
The meeting, chaired by Minister for National Food Security and Research Syed Fakhr Imam, was informed that the expected shortfall of water for Kharif crops will be 16pc. Water availability in canal heads is anticipated at 67.60m acre feet (MAF) for Kharif crops during April-September 2021 period. Presently, all the provinces are getting satisfactory water supplies in the system.
Meanwhile, textile exporters have requested Prime Minister Imran Khan to give directives for a forensic audit of yarn producers in a bid to break the cartel of cotton mafia.
In a letter written to PM Khan, officials of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) said that the cotton mafia proved to be stronger than the sugar lobby.
“Manufacturers have hiked rates of yarn by over 40% in a short span of time and created artificial shortage, citing lower cotton production in the country despite a decline in cotton prices in the international market,” they wrote. “This has dented exports of the apparel sector.”
PRGMEA Central Chairman Sohail Sheikh called on the government to take immediate steps to break the cotton cartel in order to give a strong message to all sectors that cartelization would not be tolerated.
He also urged the Federal Board of Revenue (FBR) and the Federal Investigation Agency (FIA) to conduct raids on warehouses of yarn dealers, who were allegedly hoarding a massive quantity to create artificial shortage and manipulate prices in collaboration with the manufacturers.
He added that the dealers and manufacturers were taking advantage of record low cotton production in the country. “Another major factor that is affecting exports is the sharp depreciation of the US dollar against the rupee as exporters have quoted annual prices for global buyers at Rs162 per dollar,” Sheikh said.
In addition, a spike in freight charges for sea transport, which had risen by at least 700%, posed further danger to the export-oriented textile sector, he said.
While on the foreign front, the cotton market received bullish news Friday in USDA’s April crop reports. The highlights included increasing exports 250,000 bales to 15.75 million from the previous 15.50 million. That adjustment resulted in lower ending stocks under 4.0 million bales to now stand at 3.90 million. The July market posted a new high for the move from its March 26 bottom, but then prices waned towards the close. It wasn’t exactly a buy-the-rumor-sell-the-fact moment, but it felt like one.
The U.S. dollar was up Friday as certain COVID-19 variants are increasing in the US For some reason, any sort of national trouble or threat tends to rally the dollar. Previously, the Dollar had declined as the Federal Reserve indicated a dovish stance towards interest rates.
For the week, May cotton is up 4.45 cents; for the month, 1.52 cents higher and thus far this year, it is 3.70 cents higher.
Friday, May cotton closed at 82.40 cents, up 0.99 cent, July settled at 83.74 cents, up 1.08 cents and December ended at 81.78 cents, up 0.66 cent; estimated volume was 52,595 contracts.
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 10,400 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 to 11, 000 per maund. The rate of Phutti in Punjab is in between RS 4,800 to Rs 6,000 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.
Spot Rate remained at Rs 10,800 per maund and Polyester Fiber was available at RS 215 per Kg, Naseem Usman concluded.
Copyright Business Recorder, 2021