Cotton market: Activity slows down ahead of Eid-ul-Azha holidays

KARACHI: The local cotton market on Wednesday remained s bearish and volume was satisfactory.

Cotton Analyst Naseem Usman told Business Recorder the rate of cotton in Sindh is in between Rs 13000 to Rs 13100 per maund. The rate of cotton in Punjab is in between Rs 13600 to Rs 13700 per maund.

The rate of new crop of Phutti in Sindh was in between Rs 5700 to Rs 5900 per 40 kg. The rate of Phutti in Punjab is in between Rs 5500 to Rs 6300 per 40 kg. The rate of Banola in Sindh is in between Rs 1800 to Rs 1900 per maund. The rate of Banola in Punjab is in between Rs 1900 to Rs 2100 per maund. The rate of cotton in Balochistan is Rs 13300 per maund. The rate of Phutti in Balochistan is in between Rs 6000 to RS 6200 per maund.

600 bales of Sanghar were sold at Rs 13000 to Rs 13100 per maund, 400 bales of Shahdad Pur were sold at Rs 13000 to Rs 13100 per maund, 400 bales of Tando Adam were sold at Rs 13000 per maund, 1600 bales of Chichawatni were sold in between Rs 13500 to Rs 13900 per maund, 400 bales of Hasil Pur were sold at Rs 13500 to Rs 13700 per maund and 100 bales of Mongi Bangla were sold at Rs 13700 per maund. Naseem also told that rate of cotton dropped by Rs 500 per maund in Punjab due to recent rains.

There is a need to develop high-quality cotton seeds to boost output of the crop in the country, said Minister for National Food Security and Research Syed Fakhar Imam.

Speaking at the inauguration of the Cotton Productivity Enhancement Programme on Tuesday, the minister said that cotton crop had suffered a lot in recent years due to climate change and use of substandard seeds.

“Production of the crop has declined from over 12 million bales about a decade ago to only around 7 million bales at present,” he said. “Cotton Leaf Curl Virus has a damaging effect on the crop.”

He was of the view that collaboration with the US in developing quality cotton seeds would help Pakistan boost production of the crop.

The minister expressed concern that cotton growers had suffered mammoth losses over the last three years due to its sensitivity. Last year in Sindh, about half of the cotton crop was destroyed due to untimely watering.

“Unlike four other main crops, cotton has become very sensitive,” he added. “But in the larger context of our economy, there is no substitute for cotton.” Speaking on the occasion, Pakistan Agricultural Research Council (PARC) Chairman Dr Azeem Khan revealed that Pakistan had been able to receive a large amount of germplasm by collaborating with the US.

“Development of numerous new seed varieties is under way with the help of this germplasm,” he said.

Furthermore, he said, many new seed varieties would be available in a few years, which would ultimately enhance cotton production in the country.

Three trade bodies including Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Karachi Chamber of Commerce and Industry (KCCI) and Pakistan Yarn Merchants Association (PYMA) have decided make joint efforts to get rectified budget anomalies in the federal budget 2021-22.

The decision has been made during a joint meeting held at PYMA to discuss budget anomalies and made a demand for a new meeting of Senate Budget Anomalies Committee to review the budget anomalies.

The meeting attended includes Nasser Hyatt Maggo, President FPCCI, Hanif Lakhany, Vice President FPCCI & Senior Vice Chairman PYMA, M. Shariq Vohra, President KCCI , Saqib Goodluck, SVP KCCI, Shamsul Islam, VP KCCI, Farhan Ashrafi, Convener FPCCI Yarn Standing Committee & Vice Chairman PYMA, Athar Chawla, VP FPCCI, M. Usman, Khurshid Shaikh, Aslam Moten, Anwer Aziz, Adnan Riaz, Khurrum Bharara, Junaid Teli, Sohail Nisar, Altaf Haroon, Jawed Khanani, Abdul Samad Gaba, Anis Mandavia, Waheed Umer, Nauman Ilyas, Abdullah Naeem, Shahbuddin Padela and Behroze Kapadia also attended the meeting.

Expressing strong reservations over the Senate Budget Anomalies committee, Nasser Hyatt Maggo said that the self-imposed decisions of the committee were not acceptable to the business community as the committee made decisions on budget enamels without taking the members into confidence and without convening a meeting, which is totally unfair so we will all struggle together. He also said that a letter has been sent by FPCCI to Prime Minister Imran Khan. In which the Prime Minister has been apprised of the concerns of the business community.

Shariq Vohra, President, President KCCI, while agreeing with the yarn and textile anomalies in the federal budget 2021-22, said that Karachi Chamber is with the traders in this struggle, and we request the government to address the issues facing the yarn sector on a priority basis. KCCI will extend all possible cooperation to the yarn traders.

Saqib Goodluck, SVP KCCI, Shamsul Islam, VP KCCI said that BMG Chairman Zubair Motiwala had full support in preparing the budget proposals and PYMA suggestions were also included in the budget proposals.

Hanif Lakhany, VP FPCCI, SVC PYMA, Farhan Ashrafi Vice Chairman PYMA, appreciated the role of BMG Chairman Zubair Motiwala and FPCCI President Nasser Hyatt Maggo on their serious efforts in solving the problems of the business community.

“The government had announced in its budget speech that the customs duty on yarn would be increased to 9pc and the additional customs duty, RD on yarn, would be abolished. According to reports, the government has abolished additional customs duty on yarn and the RD has also been removed but the customs duty has not been reduced as promised which is 11pc”, they mentioned.

Giving details abort the meeting Hanif Lakhany, Farhan Ashrafi demanded to bring customs duty at 7pc on yarn and additional tax of 3pc be abolished. In addition, 8B should also be abolished as promised. While eliminating the distinction between commercial importers and industrial importers, both should be taxed at the same rate. Because yarn is a raw material it cannot be counted as value added. Yarn is used as a raw material in manufacturing.

PYMA office-bearer further said that by importing yarn, commercial importers play a vital role in continuing the SMEs’ activities, as SMEs do not have enough capital to import yarn. Therefore, in order to save SMEs, tax relief should be given to the yarn sector.

Meanwhile, the Indian Government will soon sign a Memorandum of understanding with Bangladesh to expand the cotton exports. The CCI to canalise export of at least 10 Lakh bales of cotton.

The MoU is going to facilitate a Government to Government transaction. This Memorandum will be signed soon and will be handled by Cotton Corporation of India Limited. The MoU was scheduled to be signed during PM Modi’s visit to Bangladesh this year. But, due to elections in various states, it could not be signed.

Bangladesh forms a good market for Indian cotton; imports 20 to 30 lakh (each weighing around 120 kgs) bales per year. This is the first time that CCI is trying to enter the export market directly. The contract is in final stages with both the governments actively negotiating the deals. Bangladesh is worried with the government export guarantee, arguing that government of India takes a lot of time with the supplies, where as the private exporters are quite prompt.

CCI procured around 100 bales of cotton in the cotton season 2020-21 at MSP of Rs 5,515 per quintal for medium staple cotton and Rs 5,825 per quintal for long staple cotton.

Moreover, ICE cotton steadied off a one-week peak in choppy trading on Tuesday as a firmer dollar offset support from stronger grains and oil markets.

Cotton contracts for December were up 0.03 cents, or 0.03%, at 88.19 cents per lb at 13:29 pm EDT (1729 GMT) after touching their highest since July 6 at 88.48 cents.

Gains in the dollar and petroleum are balancing each other out, pushing cotton into a small trading range, said Kansas-based commodity analyst Sid Love.

The dollar rose, potentially weighing on demand by making cotton more expensive for buyers with other currencies.

But propping up cotton prices and driving gains earlier in the session were higher oil prices, which could prove a fillip to demand for the natural fibre by pushing up prices of synthetic fibres.

Sentiment in cotton markets was also boosted by gains in Chicago grain futures, with corn up more than 2%.

Cotton climbed on Monday after the United States Department of Agriculture’s (USDA) July World Agricultural Supply and Demand Estimates report showed lower world ending stocks estimates for the 2021/22 marketing year.

“Market participants have a new set of official figures upon which to trade, but most do not seem eager to do so,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

“This is quite possibly because it is evident that the USDA’s thoughts on US exports and world aggregate consumption essentially equate to pipe dreams,” Rose added.

Total futures market volumes fell by 5,850 to 11,772 lots, while total open interest gained 134 to 223,403 contracts in the previous session.

Investors also took stock of a weekly USDA report showing that 54% of the crop was in good-to-excellent condition, up from 52% a week ago.

The Spot Rate remained unchanged at Rs 13100 per maund. The rate of Polyester Fibre increased by Rs 3 per kg and was available at Rs 213 per kg.

Copyright Business Recorder, 2021