KARACHI: The sluggish trend remained continued in the local cotton market on Tuesday. Market sources told that trading volume remained very low because textile sector is not taking interest in buying of cotton amid increasing threats of lock down during the third wave of coronavirus.
Cotton Analyst Nassem Usman told Business Recorder that ICE cotton futures edged lower on Monday on forecasts for some rain in key producing regions, but losses were capped by a retreat in the dollar and strong performances from core grains markets.
Cotton contracts for July were down 0.34 cent, or 0.4%, to 87.74 cents per lb by 12:29 p.m. EDT (1629 GMT).
“West Texas had some rain end of the week and there’s still some in the forecast today, but it looks like it’s going to turn dry,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton.
“The direction of rainfall in West Texas will be the major force” behind price moves in the near term, Nunn said, adding prices will remain volatile in line with changing forecasts.
Over the past two weeks, the dry weather in the key growing region of West Texas has intermittently lifted prices of cotton contracts, but late last week the natural fibre slipped as much as 3.9% on some rainfall.
However, a weaker dollar and a sustained upward move in important grains limited losses in the natural fibre.
Chicago corn futures rose on Monday, building on strength seen last week to hit their highest since March 2013 as dry weather in Brazil raised concerns about global supplies.
In areas like Tennessee, cotton is now a significant third to corn and soybeans in terms of profits, and could lose some acres to them moving ahead during May, which is the optimum planting time in the Delta, if the natural fibre does not rally or if those grains continue to gain, Nunn added.
Seed cotton (Phutti) equivalent to over 5.645 million or exactly 5,645,967 bales have reached ginning factories across the country till May 1, 2021.
According to final fortnightly report of Pakistan Cotton Ginners Association (PCGA) for the cotton season 2020-21 released to media on Monday, Punjab arrival figures stood at 3.5 million or 3,509,798 bales while Sindh contributed over 2.1 million or 2,136,169 bales. PCGA could not release fortnightly reports during Apr 2021 due to the pandemic and the final report released Monday does not carry last year’s statistics for the month of April. The PCGA report says, “Data was not collected last year on May 1, 2020 due to Covid-19”. Hence, final report does not show comparison of today’s statistics with last year’s data.
However, PCGA’s mid March 2021 report does indicate the shortfall then stood at 34.16 per cent compared to corresponding period i.e year 2020, when arrivals were recorded 8.57 million bales. Cotton production plunged new low this year prompting the governments to take initiatives to revive past production patterns and move forward to touch new highs. Vice President, Pakistan Central Cotton Committee (PCCC) Dr Muhammad Ali Talpur had said a few days ago that a proposal was under consideration by the govt to announce cotton support price to encourage farmers.
Naseem Usman further told that the textile exports of Pakistan are experiencing and expecting a second external surge. The first one was when the first wave of the pandemic resulted in lockdowns across countries including key textile exporters like India and Bangladesh. Orders were diverted and poured into Pakistan’s textile industry. And now when it was being anticipated that strengthening and reopening of global markets from lockdown and ensuing vaccination drives in countries including Bangladesh and India would be key factors in restricting export growth in the textile segment, the new and deadly wave of covid-19 in India along with decline in textile exports from China are expected to give Pakistan’s textile exports another boost.
Exports of textile sector as per Pakistan Bureau of Statistics (PBS) were seen climbing by over 30 percent year-on-year in March-21, while there has also been a recovery on a month-on-month basis where textile exports increased by 9.8 percent. Where part of the growth is attributable to export growth in the value-added segment, it was also due to a contrasting performance in March-2021 versus a weak base of March-20 when the country went into its first real lockdown amid rising first-wave covid cases.
As per PBS data, textile exports FY21 were up by a little over 9 percent year-on-year. Much of the growth in textile exports in March-21 as well 9MFY21 is attributable to the growth witnessed in value-added segment particularly knitwear, bedwear and home textile (all recording staggering double digit growth year-on-year). Readymade garments - though a key value-added product – continued its relatively slow-paced (23% YoY) growth in March-21 and 9MFY21 as changing global dynamics amid the pandemic has pushed the demand for home textiles much higher than garments. Export of cotton yarn also continued to see spike for a second month in FY21 (up by 39% YoY in March-21), which was despite shortage of yarn in the country and the textile companies crying for duty free import of yarn.
More Over, reports being received from the fields suggest that the measures so far taken by the Punjab government have failed to attract growers towards sowing cotton this year. The acreage and production of cotton in the province has been on the decline for the last many years.
An official of the provincial agriculture department said that reports of cotton sowing, which began on April 1, are not promising. The crop has been sown on 10-12 per cent less area compared with that of last year, he added.
Currently, the crop is mostly being sown in Bahawalpur, Multan, Lodhran, Bahawalnagar and Rahim Yar Khan districts, while Khanewal, Layyah, Sahiwal districts are lagging in this respect.
Punjab is to sow the crop on 1.6m hectares of land to produce 6.07m bales. The agriculture department has issued a schedule for sowing of registered cotton varieties and advised the growers to complete sowing of registered Bt cotton varieties between April 1 and May 31.
The Bt cotton varieties recommended by the department include IUB-13, MNH-886, BS-15, Niab-878, and FH-142. Growers have been advised to consult local experts if they plan to sow other registered Bt cotton varieties keeping in view the environment of their district to get better production.
They have also been advised to cover 10pc of their lands with non-Bt varieties so that attacking pests do not develop resistance against Bt varieties.
The European Parliament has adopted a resolution calling for a review of the GSP+ status granted to Pakistan in 2014 keeping in view the “alarming” increase in the use of blasphemy accusations in the country as well as rising number of online and offline attacks on journalists and civil society organisations, it emerged on Friday.
The resolution also calls on the Government of Pakistan to “unequivocally condemn” incitement to violence and discrimination against religious minorities in the country, and expresses “deep concern” at the prevailing anti-French sentiment in Pakistan.
Chairman Cotton Ginners Forum Ehsan ul Haq told that after the adoption of the resolution by European Parliament Pakistani textile industry was in a shock. He said that Pakistan’s 25 percent cotton export is to EU. He said that if the EU has taken back the GSP plus status from Pakistan it will have a severe impact on the economy of Pakistan. The spot rate remained unchanged at Rs 11300 per maund. The Polyester Fiber was available at Rs 200 per kg.
Copyright Business Recorder, 2021