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Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,206
7124hr
Pakistan Cases
1,223,841
2,58024hr
4.69% positivity
Sindh
450,126
Punjab
421,800
Balochistan
32,757
Islamabad
104,114
KPK
171,072

KARACHI: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Thursday increased the spot rate by Rs 100 per maund and closed it at Rs 13100 per maund. Cotton Analyst Naseem Usman told Business Recorder that local cotton market on Thursday remained bullish and volume remained satisfactory.

The rate of cotton in Sindh is in between Rs 13250 to Rs 13350 per maund. The rate of cotton in Punjab is in between Rs 13700 to Rs 13800 per maund.

The rate of new crop of Phutti in Sindh was in between Rs 6000 to Rs 6200 per 40 kg. The rate of Phutti in Punjab is in between Rs 6000 to Rs 6700 per 40 kg. The rate of Banola in Sindh is in between Rs 2000 to Rs 2100 per maund. The rate of Banola in Punjab is in between Rs 2000 to Rs 2200 per maund.

1400 bales of Tando Adam were sold at Rs 13200 to Rs 13300 per maund, 1200 bales of Sanghar were sold at Rs 13225 to Rs 13250 per maund, 1000 bales of Shahd dad Pur were sold in between Rs 13250 to Rs 13300 per maund, 200 bales of Matyari were sold at Rs 13250 per maund, 400 bales of Chichawatni were sold at Rs 13700 to RS 13800 per maund, 200 bales of Burewala were sold at Rs 13800 per maund, 200 bales of Hasil Pur and 400 bales of Mongi Bangla were sold at Rs 13500 per maund.

ICE cotton ended a three-session streak of gains on Wednesday, falling in tandem with dips in corn and wheat futures, with a stronger dollar adding further pressure. Cotton contracts for December were down 0.36 cent, or 0.4%, at 87.04 cents per lb at 11:51 a.m. EDT (1551 GMT).

"We're seeing that corn and wheat are trading quite a bit lower today again," and negativity from that is carrying over to cotton, said Bailey Thomen, cotton risk management associate at StoneX Group.

Chicago corn futures fell well over 2% on Wednesday, and were trading near their lowest levels in more than a week, while wheat contracts also slipped. Tuesday's volatility could have "knocked some people out of the market in terms of their positions, and today could be just a little bit of repositioning," Thomen added.

Cotton futures closed marginally up in choppy trading on Tuesday, retreating after touching their highest level in more than four months earlier in the session. The dollar rose, making cotton more expensive for other currency holders, and potentially weighing on demand.

The US Department of Agriculture's (USDA) weekly crop progress report on Tuesday showed 52% of the crop was in good-to-excellent condition, identical to a week ago.

Total futures market volume fell by 20,818 to 11,196 lots. Data showed total open interest gained 2,326 to 221,249 contracts in the previous session. According to figures from SBP, half of incremental Rs 146 billion LT loans disbursed under LTFF/TERF schemes have been extended to textile manufacturers (over last 12 months). These include industries in spinning, weaving, and fabric finishing segments, which have historically formed the bulk of Pakistan's textile exports.

As Pakistan gears for export led growth over the next 2 years, it seems it has once again placed the proverbial eggs in the textile basket. But does it have the raw material to get to $10 billion incremental exports by next year?

Much has been made of Pakistan poaching orders from other value-add competitors during last year, when GoP lifted lockdown early even as lockdowns persisted elsewhere. Timely capacity expansions and energy pricing have been lauded as initiatives that will enable local exporters maintain regional competitiveness as industries in Bangladesh, India, and Viet Nam come fully back online. But with domestic cotton output set to record a new low, can the exporting sector survive on imported raw material alone?

According to figures from SBP, half of incremental Rs 146 billion LT loans disbursed under LTFF/TERF schemes have been extended to textile manufacturers (over last 12 months). These include industries in spinning, weaving, and fabric finishing segments, which have historically formed the bulk of Pakistan's textile exports. As Pakistan gears for export led growth over the next 2 years, it seems it has once again placed the proverbial eggs in the textile basket. But does it have the raw material to get to $10 billion incremental exports by next year?

Much has been made of Pakistan poaching orders from other value-add competitors during last year, when GoP lifted lockdown early even as lockdowns persisted elsewhere. Timely capacity expansions and energy pricing have been lauded as initiatives that will enable local exporters maintain regional competitiveness as industries in Bangladesh, India, and Viet Nam come fully back online. But with domestic cotton output set to record a new low, can the exporting sector survive on imported raw material alone?

For at least past two years, Pakistan now features among top 5 importers of cotton and cotton-based raw material/intermediate goods, which feed into manufacturing of high value add products such as apparel, readymade garments, and home textiles. According to UN Comtrade data, in 2019, world imports of cotton and cotton-based products (HS Code 52) - which includes raw cotton, cotton yarn, and cotton fabrics - stood at $55 billion, of which Pakistan's total share stood at nearly $1Bn. In contrast, China, Bangladesh, and Viet Nam accounted for bulk of global cotton-based imports, with China $9.2 billion; Bangladesh, $6.5 billion, and Viet Nam $4.4 billion.

Unlike Pakistan - which until last year met half of its cotton requirement through domestic production - Bangladesh and Viet Nam have virtually nil cotton production. Yet, together with China, the three countries account for 45 percent of total $450 billion global apparel exports (HS Codes: 61 and 62), the holy grail of textile value-addition ladder. Uninterrupted access to imported raw material appears to have had a multiplier effect on Bangladeshi and Vietnamese value-added exports.

The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 13100 per maund. The Polyester Fiber was available at Rs 210 per kg.

Copyright Business Recorder, 2021

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