KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Thursday increased the spot rate by Rs 100 per maund and closed it at Rs 13000 per maund. The local cotton market on Thursday remained bullish and trading volume was good.
Cotton Analyst Naseem Usman told Business Recorder the rate of cotton in Sindh is in between Rs 13000 Rs 13100 per maund. The rate of cotton in Punjab is in between Rs 13500 to Rs 13600 per maund.
The rate of the new crop of Phutti in Sindh was in between Rs 4800 to Rs 5300 per 40 kg. The rate of Phutti in Punjab is in between Rs 4800 to Rs 6200 per 40 Kg. The rate of Banola in Sindh is in between Rs 1600 to Rs 1800 per maund. The rate of Banola in Punjab is in between Rs 1700 to Rs 1900 per maund. The rate of cotton in Balochistan is Rs 13000-13100 per maund. The rate of Phutti in Balochistan is in between Rs 5000 to RS 5300 per maund.
4000 bales of Tando Adam, 600 bales of Khadro, 1800 bales of Sanghar, 2200 bales of Hyderabad were sold at Rs 13100 per maund, 400 bales of Sarhari, 2800 bales of Shahdad Pur were sold at Rs 13000 per maund, 400 bales of Jhole, 400 bales of Khipro, 600 bales of Shah Pur Chakar were sold at Rs 12900 per maund, 400 bales of Khanewal were sold at Rs 13700 per maund, 400 bales of Multan were sold at Rs 13650 per maund, 200 bales of Samundri, 400 bales of Chichawatni, 600 Haroonabad and 200 bales of Hasil Pur were sold at Rs 13600 per maund.
Cotton Analyst Naseem Usman told Business Recorder that according to the statement of chairman Pakistan Cotton Brokers Association Major Muhammad Kashif Islam (r) in its statement said that All Pakistan Textile Mills Association agreement with Uzbekistan for growing cotton is against Pakistan's economy and farmers. The government should immediately suspend the agreement because it seems to be a continuation of conspiracy.
Cotton yesterday settled up by 1.14percent at 27440 amid expectations of lower supply and increased demand from the textile industry as countries continue re-opening efforts. World cotton stocks are projected at 89.3 million bales at the end of 2021/22, the lowest in three years.
Meanwhile, global production is forecast 5percent higher at 118.9 million bales but still set to remain below 2019 record levels. Output is expected to decline in China as the industry becomes less competitive with rising labor costs.
On the other hand, high cotton yields are projected in the US, Brazil, Australia, and Pakistan due to favorable weather conditions and the increasing harvested area.
The USDA's weekly export sales report showed net sales of 251,900 running bales (RB) for the 2021/2022 marketing year, primarily for Turkey, Pakistan, Vietnam, Mexico, and China.
The report also showed exports of 246,100 RB for the new marketing year, up 32percent from the previous week and 2percent from the prior 4-week average. Pink bollworm attack on cotton crop has been reported in some areas in Bathinda district. Farmers are claiming damage on the cotton sown earlier.
The pink bollworm attack has been reported in Talwandi Sabo, Sangat, and Rama blocks along with few villages adjoining Bathinda city. In the spot market, Cotton gained by 210 Rupees to end at 27090 Rupees.
Technically market is under fresh buying as the market has witnessed a gain in open interest by 3.09percent to settled at 5744 while prices are up 310 rupees, now Cotton is getting support at 27240 and below same could see a test of 27050 levels, and resistance is now likely to be seen at 27550, a move above could see prices testing 27670.
According to the State Bank of Pakistan (SBP) Second Quarterly Report on the "State of Pakistan's Economy for FY21" "Within agriculture, most of the major Kharif crops performed better than last year, this improvement was attributed mainly to increases in their areas under cultivation.
The government's support package for Rabi crops, comprising subsidies on key inputs, and an increase in the support price for wheat, are likely to bolster the overall crop sector growth. However, cotton exerted a drag on the overall agricultural performance, as the revised production estimate of 7.7 million bales represented the lowest output since FY86. Nonetheless, due to better output of other crops, the overall agriculture sector is expected to register positive growth".
Unfortunately, however, the country is likely to miss cotton production target of 10.5 million bales. The reasons behind this grim outlook are high input costs including fertilizers, diesel, tractors and pesticides. Water shortages also constitute a major hurdle to cotton growth prospects. The government, in my view, is required to examine the entire situation at the earliest with a view to initiating some remedial steps.
Moreover, global demand for readymade garments by big fashion houses from Bangladesh has dried up. This is coinciding with the peak season for purchase orders. Around 35 to 40 per cent of annual exports are made during this period. Orders from Western markets for the winter season and Christmas are almost ready for shipment. However, the products will go unsold unless they are delivered soon. As per Syed Nazrul Islam, Senior VP, BGMEA and a garment trader in Chattogram, products are ready for export and factory owners are anxious to dispatch their shipments.
The shutdown orders in Bangladesh have been extended to export-oriented manufacturing units as well. Factories will not reopen until August 5, at least. The situation presents an unusual predicament for the apparel industry, as garment factories were allowed to operate during the first phase of lockdowns in March 2020. Factory owners are reticent about resuming operations before the end of the lockdown in the face of an ever-worsening pandemic.
Reopening factories in the face of soaring infections seems a dim possibility. Some exporters are toying with the idea of finishing the work with a small number of workers if the lockdown is prolonged. Before the second wave of the pandemic struck, the garment sector was seeing signs of a turnaround, but this optimism is slowly starting to dissipate. The only solution to the crisis seems a mass vaccination program for workers.
Telangana in India turned out to be the largest supplier of cotton and second largest supplier of paddy in the country. Union Agriculture Minister Narendra Singh Tomar informed the Lok Sabha on Tuesday that Telangana supplied about 178.55 lakh quintals of cotton and 94.48 lakh tonnes of paddy during the Kharif (Vaanakalam) Marketing Season of 2020-21.
Accordingly, the State's cotton procurement is almost double the cotton procured by Maharashtra which stood at second position with 91.98 lakh quintals. The cotton crop was sold to Cotton Corporation of India which is in addition to the crop purchased by private businessmen.
Similarly, Telangana stood in second position in terms of paddy procurement with 94.48 lakh tonnes for Kharif Marketing Season 2020-21. With 135.89 lakh tonnes, Punjab secured the top slot. During the Rabi (Yasangi) Marketing Season 2020-21, Punjab and Telangana have procured an estimated 132.1 lakh tonnes and 92 lakh tonnes respectively.
The State had also purchased 6,743.84 tonnes of pulses during the ongoing procurement. All the crops were purchased from farmers at Minimum Support Price as part of the Centre's Price Support Scheme aimed at eliminating middlemen and support farmers. All the payments to the farmers for their produce are made directly into their bank accounts by the concerned procuring agencies.
The apparel, textile, footwear, and electronics industries in Vietnam have been most harshly affected by COVID-19-related shutdown. There are more than 6,000 factories in Vietnam, which employ more than three million workers. Production shutdowns at footwear manufacturers have already caused supply chain disruptions for major brands, some of whom have begun using airfreight to get their products out of Vietnam as quickly as possible amid a shipping crunch. Also at risk of interruption are supply chains of other large companies that have their products manufactured in factories in Vietnam.
The situation is likely to worsen in the coming weeks as the flow of cargo through Vietnamese ports increases. Should logistical operations deteriorate while production continues, there is a risk of warehouse space becoming scarce.
As many companies run operations at their manufacturing facilities amid stringent COVID-19 measures, thousands of workers have been locked down at the factories with sleep facilities and food provided by the company. Should the situation continue, exhaustion of workforce might occur, as not all workers are able or willing to spend a few months at the workplace. For a factory that has more than 500 workers it is not quite worth it in terms of organizing the food and living conditions in these makeshift conditions.
ICE cotton futures posted a new contract high on Wednesday on robust global demand and firmer Chicago grain prices, while markets awaited a key export sales report.
Cotton contracts for December added 0.27 cent, or 0.3percent, to 90.50 cents per lb, by 11:42 a.m. EDT (1542 GMT), earlier rising to a contract high of 91.00 cents per lb. "Most of it is the arbitration price between the US and China, which at $1.00 a bale is huge, and as long as that price gap exists, cotton won't go down," with demand for exports still good, said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
"The Chicago markets are holding some high prices, that's a positive," Varner said, and "there's no problem for supply around the world. It is the good demand prospects that keep cotton at 90 cents." US wheat futures rallied more than 2percent on Wednesday on increasing concerns over US supplies after a tour showed crop damage due to dry weather in a key producing state.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 13000 per maund. The Polyester Fiber was available at Rs 216 per kg.
Copyright Business Recorder, 2021