KARACHI: The local cotton market on Tuesday remained stable. Market sources told that trading volume remained thin.
Cotton Analyst Naseem Usman told Business Recorder that it is a matter of grave concern that Pakistan which is the number four biggest cotton producer in the country is now the biggest importer of cotton in the world
Naseem Usman also told that due to the expected bumper cotton crops record advance deals of cotton and Phutti were done on the condition of delivery till June 3 to June 10. The deals of Phutti were done on the rate of Rs 5300 per 40 kg to Rs 5700 per 40 kg while deals were of cotton on the condition of delivery on June 12 were done on Rs 12200 to Rs 12500 per maund.
Meanwhile, the headlines have been reading staggering jump in textile exports in April 2021, but the devil is in the details; the 3.4 times increase in textile exports in April-21 is primarily because of the low base effect where April-20 last year was a month of extreme Covid restrictions and lockdowns across the globe, which significantly affected the industrial activity across the world including Pakistan and the number of export orders coming in as well. Month-on-month, textile exports in April-21 have been slightly lower by 1.3 percent.
Despite the misleading growth percentage and the month-on-month decline, the textile exports in April-21 are the third highest monthly figure in the last one year at $1.337 billion as per the data by Pakistan Bureau of Statistics (PBS). In April-21, all segments within the textile group posted triple digit growth year-on-year. Where a major part of the growth in April is attributable to the low base effect, the textile exports have been on an upward trajectory due to growth in export of the value-added segment.
As per PBS data, textile export in 10MFY21 was up by over 17 percent year-on-year to $12.7 billion. While the trend of textile export growth coming from the value-added segment continued in April-21 and overall 10MFY21, April also saw a jump in the exports of basic textiles like cotton yarn and cotton cloth. However, in 10FY21, the exports from the two segments remained negative – in line with what’s been going on in the previous months. In the value-added segment; knitwear, bedwear and home textile ruled, recording double digit growth in 10MFY21. Readymade garments - though a key value-added product – continued its relatively slow-paced (12.6% YoY) growth in 10MFY21.
Towel Manufacturers Association of Pakistan (TMA) has expressed concerns over FBR’s proposed Simplification of Export Promotion Scheme with a number of observations.
Feroze Alam Lari, Chairman TMA, tagged his apprehensions to a proposed FBR draft # C.No:5 (7) EP/2019-Pt on the Simplification of Export Promotion Scheme.
His observations said that an SRO 450(1) was introduced in 2001 related to DTRE Rules to facilitate the manufacturers and the exporters, but it did not truly support the export oriented industry. Manufacturers were not getting full advantage of the scheme, so the Government introduced an SRO 327(1) /2008 to provide better support to the Industry.
This Simplification of Export promotion Scheme draft is just like the DTRE rules and gives a lot of discretion power to the government officials which will open the door of corruption and will create lot of hurdles for the genuine manufacturers-cum-exporters, according to him.
According to the draft, at the time of goods import, applicants need to submit a bond and I.B. to the department for one year as well as need to resubmit the Bond and I.B. to release the goods which is duplication as well as it will create extra financial burden on the exporters.
Naseem Usman told that with the partial arrival of Phutti for the season 2021- 22 the trading for the new season has started in the cotton market.
It is also pertinent to mention here that the Federal Committee on Agriculture has fixed white lint production target for the country at 10.5 million bales from an area of 2.33m hectares for the 2021/22 season, almost double over the previous year.
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 the 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. The growers have been asked 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.
ICE cotton futures fell on Monday pressured by weakness across grain markets and forecasts for rainfall in the top-producing West Texas region.
Cotton contracts for July fell 0.23 cent, or 0.3% to 82.59 cents per lb by 12:59 p.m. EDT (1659 GMT). It traded within a range of 82.12 and 82.93 cents a lb.
“It appears, looking at weather patterns (in southern United States), that things are improving and we’ll be okay for now,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting, adding that weaker grain prices also likely drove the market lower.
Chicago wheat futures dropped to their lowest in more than a month and corn and soyabean also fell, dampening sentiment.
Cotton could lose some acreage to soybeans and corn, which are at attractive levels, and if that helps to drive ending stocks lower, that should be friendly to the market, Love said, noting that demand also remained strong.
Market participants now await a weekly crop progress report from the US Department of Agriculture due later in the day.
Speculators cut net long positions in cotton futures by 7,611 contracts to 49,279 in week to May 18, data from the US Commodity Futures Trading Commission showed on Friday.
Total futures market volume fell by 18,257 to 11,248 lots. Data showed total open interest gained 420 to 221,693 contracts in the previous session.
Certificated cotton stocks deliverable as of May 21 totalled 131,061 480-lb bales, up from 122,987 in the previous session
The Spot Rate remained unchanged at Rs 12000 per maund. The Polyester Fiber was available at Rs 200 per kg.
Copyright Business Recorder, 2021