KARACHI: The local cotton market on Wednesday remained steady and spot rate gained Rs 500 per maund reaching to Rs 11, 300 per maund from earlier Rs 10, 800 per maund.
Cotton market analyst, Naseem Usman told Business Recorder that increase in spot rate reflect stability in the market while there were some business too.
Domestic transactions witnessed some 200 bales at Kotri with price at Rs 11, 400 per maund, 600 bales were sold in Rahim Yar Khan at the rate Rs 11,500 to Rs 12,000 per maund, 400 bales at Bahawalpur at a rate of Rs 11, 785 per maund, 400 bales at Multan at RS 11,500 per maund and 200 bales at Khanpur at a rate of Rs 11, 500 per maund, he added.
Meanwhile, ICE cotton futures rose on Tuesday on concerns about a drought in Texas, while strong performances from key grains also supported prices of the natural fibre.
The cotton contract for July was up 0.74 cent, or 0.89 %, to 84.00 cents per lb by 12:22 p.m. EDT (1622 GMT). It traded within a range of 83.49 and 84.6 cents a lb.
The drought conditions, rated ‘exceptional’ in certain parts of west Texas, continue to support the market, said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia. The US Department of Agriculture’s weekly crop progress report on Monday showed 11% of the total 2021 cotton crop was planted in the week ending April 18, above the five-year average of 9%.
“Cotton demand still looks robust, because in the last crop report, USDA increased the export category, that shows you that the USDA finally had to acknowledge the superior demand that has been unfolding in January, February and March,” Brown added. In its monthly supply and demand report, which was released on April 9, USDA hiked projections for US cotton exports and lowered estimates for ending stocks.
While at the domestic front, good news appeared in a section of press that Pakistan performed better than India in apparel exports to the United States in February 2021. Pakistan had an outstanding performance among apparel export destinations globally during February, according to Sourcing Journal, a credible source for textile sector information.
“We were the only main exporter with increased apparel supply to America during Covid-19,” said Adviser to PM on Commerce Abdul Razak Dawood while talking to a local newspaper.
Pakistan was on top position in the list of countries that export textile, according to a report released by Apparel Resources, another international platform that gives insights into apparel industry exports.
Normally, India and Bangladesh perform better than Pakistan but this time Pakistan has fared better than its neighboring countries despite all the challenges of Covid-19 faced worldwide.
Although the apparel import value of the US, a prominent destination for textile exports, decreased 8.7% year-on-year to $5.39 billion in February 2021, its volume increased 3.2% and Pakistan was on top of the list of countries which witnessed a hike in their apparel exports.
Other countries that recorded growth in exports included China, Bangladesh and Egypt. Pakistan and China managed to increase their apparel shipments to the US both in terms of value and volumes. “Pakistan is showing the world that we are a reliable supply destination,” Dawood emphasized.
India, Vietnam and Indonesia experienced a decline in apparel exports to the US both in value and volume terms.
Dawood claimed that government policies for the textile industry played a significant role in exports. “Our vision is to promote ‘Make in Pakistan’,” Dawood remarked.
Even though the country is performing well in textile exports, it is facing many challenges to keep up with the performance. The biggest hurdle is the decrease in cotton production in the country, which is the main raw material for the textile sector.
The country is facing shortage of around half of its requirement of cotton, estimated at seven million bales. Giving in to the pressure from the textile industry, the government recently allowed duty-free import of cotton yarn.
“Countries now want to diversify their supply chain and this is a good chance for Pakistan to grab its share in countries which imported products from other countries previously,” said the report.
“This will be a challenge for Pakistan; either it increases exports through existing companies or helps new players to venture into this sector.” Through its policy, Pakistan can encourage foreign direct investment in this sector by inviting companies to move their factories from other countries to the free economic zones in Pakistan.
Meanwhile, North Karachi Association of Trade & Industry (NKATI) has demanded of the government to allow import of cotton yarn besides abolishing all taxes, duties on cotton yarn import for a long-term basis to compete with regional countries so that textile industry may be saved from catastrophe.
Faisal Moiz Khan, President NKATI made this demand at a meeting of the Association. The meeting also appreciated the federal government’s decision to withdraw duty on import of cotton yarn. Participants of the meeting, however, stressed the need for taking more steps by the Government to make the local millers more competitive.
For the first time in history, the Cotton Crop Assessment Committee has set a lower yield target for Punjab’s crop than it claims to have achieved during the preceding year. At a time when global cotton prices are resurgent and the crop in short supplies domestically, what explains the underwhelming expectations from cotton in the upcoming sowing season?
The easiest explanation, of course, is that the yield claimed to have been achieved in the outgoing year is inaccurate and may see a significant downward revision once the final figures are announced. That would mean that the government is finally ‘keeping it real’; as it is far easier to surpass mediocre targets than to aim high and fail miserably. But that raises very tragic implications for public policymaking, calling into question the very wisdom of target-setting, a subject best left for another day,
With acreage under the crop at an all-time low, traditional wisdom dictates that only the most efficient growers must stick to the crop, especially given the opportunity to shift to more profitable choices that are also less risky. So why does the government expect so little out of cotton farmers?
A survey of SBP’s State of the Economy reports over the past decade reveals that those responsible have implicated nearly every reason imaginable for falling crop productivity. It is as if those in coming years only those with gambling instincts would continue to bet long on the crop, hoping to hit big in the face of adversity.
That would matter little if the policymakers had the gumption to leave things to market forces, which - given the overwhelming threats to crop’s survival - may lead to its eventual extinction. Except that the ever-increasing reliance on the textile sector for precious export dollars mean that alarm is routinely raised over its dismal performance. Yet, it appears that the same tried-tested-and-failed solutions are dusted off and proposed each time, like a staircase that leads to nowhere.
Consider that the ministry of National Food Security & Research has once again floated the proposal of instituting a minimum support price and procurement by Trade Corporation of Pakistan to revive area under the crop. Never mind the epic failure government footprint has been in procurement of other crops such as wheat or sugarcane. Are the overlords at the ministry blissfully unaware of the shrinking fiscal space, rendering such schemes no better than fantasies?
If the crop failure of last 10 years have made one thing obvious, it is that this highly risk-prone cotton crop needs 21st century risk mitigation and management solutions, whether they come in the form of crop insurance, price stability through trading over commodity exchanges, contract farming, warehouse receipt financing, or adoption of technology. Which of those proposals may be best suited to unique local setting must be debated comprehensively by both the stakeholders and the public before their adoption.
But that would require stepping out of the comfort zone afforded by political grandstanding. And if the events over past week are anything to go by, that’s one thing the ruling party seems resolutely incapable of, remarked a research report appeared in this newspaper.
Copyright Business Recorder, 2021
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