KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Friday decreased the spot rate by Rs 200 per maund and closed it at Rs 12700 per maund. The local cotton market was bearish and trading volume remained low.
Cotton Analyst Naseem Usman told Business Recorder the rate of cotton in Sindh is in between Rs 12600 Rs 12700 per maund. The rate of cotton in Punjab is in between Rs 13000 to Rs 13100 per maund. The rate of new crop of Phutti in Sindh was in between Rs 5600 to Rs 5800 per 40 Kg. The rate of Phutti in Punjab is in between Rs 5500 to Rs 6200 per 40 Kg. The rate of Banola in Sindh is in between Rs 1800 to Rs 1800 per maund. The rate of Banola in Punjab is in between Rs 1800 to Rs 2000 per maund. The rate of cotton in Balochistan is Rs 13000-13100 per maund. The rate of Phutti in Balochistan is in between Rs 5700 to RS 5800 per maund.
The rate of cotton in Punjab dipped by Rs 500 to Rs 600 per maund while the rate of cotton in Sindh decreased by Rs 400 to Rs 500 per maund due to rains.
600 bales of Hyderabad were sold at Rs 12500 to Rs 12600 per maund, 400 bales of Shahdad Pur were sold at Rs 12700 per maund, 800 bales of Sanghar, 200 bales of Noabad were sold at Rs 12600 per maund, 200 bales of Kotri were sold at Rs 12500 per maund and 200 bales of Hasil Pur were sold at Rs 13000 per maund.
Ministry of National Food Security and Research presented a summary to buy 200,000 cotton bales by TCP to promote cotton production. Economic Coordination Committee approves formation of Cotton Price Review Committee with a mandate to review market price and propose intervention at fortnightly basis.
Meanwhile, ICE cotton futures eased off a contract high hit earlier on Thursday after a weekly report by the US Department of Agriculture showed a decline in the exports of the natural fibre crop.
Cotton contracts for December fell 0.16 cent, or 0.2%, to 89.65 cents per lb, at 11:39 a.m. EDT (1539 GMT), having earlier hit a high of 89.95 cents per lb. In the previous session, the contract got past the previous high of 89.28 cents per lb set on Feb. 25.
“Today’s sales and shipments were rather poor. They weren’t terrible, but they weren’t as good as they’ve been in the last several months,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
The USDA’s weekly export sales report showed net sales of 34,500 running bales (RB) for the 2020/2021 marketing year, down 34% from the previous week and 51% from the prior four-week average. The report also showed exports of 185,900 RB were down 37%from the previous week and 31% from the prior 4-week average. The dollar ticked up, putting some pressure on cotton prices by making the fibre more expensive for buyers with other currencies.
“I think the Chicago markets will put a strong force underneath cotton. As long as wheat, corn and soybeans are up, cotton can’t go down too far,” Varner said, adding cotton was likely to consolidate at current levels in the near-term.
Chicago corn and soybean futures edged down on Thursday after rallying the day before, as prices faced chart resistance and market participants assessed contrasting conditions for US crops. Total futures market volume fell by 16,857 to 11,923 lots. Data showed total open interest gained 7,225 to 233,963 contracts in the previous session.
In a recent op-ed for this newspaper, Tahir Jahangir, ex-chairman of Towel Manufacturers Association of Pakistan, noted that the ongoing export boom may not last long, as the 13 percent increase in textile export earnings during FY21 is largely fuelled by higher world cotton prices. In fact, world cotton prices as tracked by Cotton A Index; during FY21 were 15 percent higher than FY20 (12-month averages). Which begs the question: is textile export volume at all rising?
Over the past few years, share of value-added products in textile export earnings has increased, while export earnings from yarn and cloth have fallen drastically. Since overall value of exports has grown, this may imply that the country is exporting more value-added goods, a welcome sign. However, two concurrent trends have appeared, which lend credence to the claim that higher export earnings have not come on the back of meaningful volumetric export growth.
If PBS, USDA, and Textile division (MoC) are to be believed, Pakistan’s textile fibre output is static at ~3.4 million metric tons for past 5 years (excluding covid-year). Since yarn exports have been steadily falling since FY13, it follows that a higher quantum of yarn output is being retained locally. Domestic yarn consumption has increased by 38 percent during the intervening years. Is locally consumed yarn feeding into higher volume of value-added exports? Or is the textile industry consuming higher volumes of yarn to make value-added products for an ever-growing local market?
While yarn (LSM) data is considered reliable as it is primarily reported by spinning mills in the documented sector, woven cloth production mainly takes place in the SME weaving clusters, which do not formally report their output. If cotton cloth figures as reported by LSM were to be believed, cotton cloth production would appear to be similarly static at 1.05 billion square meters. Since this is less than of the cloth export volume, the LSM production number cannot be relied upon as an indicator for total cloth output. Moreover, Cotton Corporation of India increased the price by Rs 200 per candy.
The Spot Rate Committee of the Karachi Cotton Association on Friday decreased the spot rate by Rs 200 per maund and closed it at Rs 12700 per maund. The Polyester Fiber was available at Rs 213 per Kg.
Copyright Business Recorder, 2021
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