KARACHI: Significant increase of Rs 400 to Rs 500 per maund in the rate of cotton was witnessed due to increase in buying by the textile mills. There is bullish trend in the international cotton markets. Production of cotton is satisfactory. The intervention price of Phutti has been fixed. There is an increase in the rate and demand of cotton yarn, and textile spinners are satisfied.
Due to increase in buying by the textile and spinning mills the rate of cotton witnessed an increase of Rs 400 to Rs 500 per maund. On the other hand the supply of Phutti increasing but due to increase in the number of operational ginning factories apparently, it looks that supply of Phutti has decreased. The rate of Phutti is increasing as a result of the increase in the rate of cotton. Increase of Rs 200 to Rs 300 per 40 kg was recorded in the rate of Phutti.
Sources in the textile industry said that textile mills had signed cotton import agreements with foreign countries but the delivery of imported cotton is delayed by two to three months due to delay in shipments. The major reason behind increasing in the price of cotton is that textile mills have to buy cotton from local cotton market due to delay in shipments in order to fulfil their needs.
On the other hand, some mills which were not involved in buying last year due to increase in the rate of cotton because of increase in the prices of dollar are taking interest in buying.
According to the information received the situation of cotton crop is satisfactory. Last rains had cast impact on the cotton crop. The arrival of cotton is satisfactory as compared to the previous year.
However, textile mills are signing agreements for the import of cotton due to increase in the rate of cotton. It is expected that this year 85 lac bales of cotton will be produced despite of the fact that this year local production of cotton will be better.
It is expected that this year the demand of cotton will be one crore seventy lac bales due to installing of new machinery, whereas it is expected that local production will be 85 lac bales and cotton in large quantity have to be imported in order to meet the local demand.
As per cotton importers every day new import agreements are being signed and up till now agreements for import of five to six lac bales have already been signed.
The rate of cotton in Sindh after increasing by Rs 400 to Rs 500 per maund reached from Rs 13300 to Rs 13500 per maund. The rate of Phutti is between Rs 5200 to Rs 5800 per 40 kg. The rate of Banola is between Rs 1650 to Rs 1750 per maund.
The rate of cotton in Punjab is between Rs 13350 to Rs 13800 per maund. The rate of Phutti is between Rs 5200 to Rs 6300 per 40 kg. The rate of Banola is between Rs 1700 to Rs 1800 per maund.
The rate of cotton in Balochistan is between Rs 13200 to Rs 13500 per maund. The rate of Phutti is between Rs 5600 to Rs 6300 per 40 kg while the rate of Banola is between Rs 1800 to Rs 1900 per maund.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 400 per maund and closed it at Rs 13400 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman says that overall a bullish trend prevails in the international cotton markets. The Rate of Promise (Waday Ka Bhao) of New York Cotton was in between 89.50 American Cent per pound to 91.70 American Cent per pound.
While according to the weekly USDA export report there was a slight increase as compared to the rate of last week.
Due to a trade dispute between China and the United States, China still refrains from buying cotton from the United States. However, China is selling its old cotton stock. The cotton crop is affected in Brazil due to rains due to which the rate of cotton has increased. The increasing trend in the rate of cotton was witnessed in Central Asian states and African countries while a mixed trend was seen in the rate of cotton in India.
Naseem Usman told that production of cotton crop is expected to improve globally in 2021-22. After a decrease of 7 % in 2020-21 as compared to 2019-20 it is expected that cotton production will reach 25 million tons after increasing by 3% in 2020-21.India, China, Brazil and America will be the top producers.
It is expected that American cotton in 2021-22 will be 3.8 million ton which will be 22% more than previous figure.
In 2020-21 significant decrease was witnessed in the area and production of cotton in Pakistan. The area was reduced by 21% and the production decreased by 33 %.
The major reason behind the reduction in cotton crop is uncertain weather conditions, attack of insects and good rates announced by government for competitive crops due to which the farmers switched to other crops such as sugarcane and corn. It is expected that production of cotton in Pakistan in 2021-22 will be the same. It is expected that Pakistan will rely on imported cotton in order to fulfil its demand.
Farmers Advisory Committee (FAC) on Tuesday issued its fortnightly guidelines for cotton farmers applicable from Aug 1-15, advising farmers to drain out stagnant water from field in case of rains and do not let crop under stress to make the most of its ongoing phase of flower and boll formation.
In the fifth FAC meeting chaired by director Central Cotton Research Institute (CCRI) Multan Dr Zahid Mahmood and attended by experts, farmers were urged not to let crop face shortage of implements like water, fertilizers to continue their growth momentum. However, the farmers should avoid water application in case of rains and opt for only light irrigation when needed. Farmers must not let rainwater stagnating, the experts said adding that it should be drained out.
Federal Minister for National Food and Security Syed Fakhar Imam, on Wednesday, said that the government has approved cotton intervention price.
While addressing a press conference in Islamabad, the minister said cotton intervention price has been set at Rs 5,000 per 40kg of seed cotton by the cabinet.
He said, "If prices fall below Rs 5,000/40kg of seed cotton then the intervention policy will be activated."
The federal minister said that the procurement will be set as 90 percent of the import parity price (IPP).
Furthermore, he said, "Ministry will constitute a 'Cotton Price Review Committee' which will monitor cotton price in the country. This committee will direct the TCP to start procurement if prices fall." He said that the TCP will initially procure 200,000 bales of cotton.
He said that it will ensure that farmers get directly benefited from its procurement.
The minister hoped that it would stabilise cotton prices in the country.
Imam said that the government is working on a cotton revival program, which will be introduced soon.
He said primary aim of this programme is to provide quality input for cottonm especially cotton seed and pesticides in addition to modernisation of ginning technology.
Imam said a Cotton Price Committee has been formed to fix the cotton price at five thousand rupees per forty kilograms.
He said the government is introducing quality control system to ensure the quality of cotton seed. He said efforts are being made to make Pakistan self-sufficient in edible oil.
On the other hand the farmers had rejected the intervention price of Rs.5,000 per 40 kg of cotton to encourage cotton production activities and increase the country's production.
Ehsan-ul-Haq, chairman of the Cotton Ginners Forum, said that the federal cabinet in its recent meeting had decided to fix an intervention price of Rs5,000 per 40 kg for cotton, which was rejected by farmers' organizations. According to him instead of benefiting the farmers it will lead to a fall in cotton prices in market.
He appealed to the Prime Minister Imran Khan to fix the new price of cotton at least Rs 6,000 per 40 kg so that farmers could benefit from it and cotton prices in the open market could remain stable.
It may be recalled that the federal cabinet had decided that if the price of cotton in the open market fell below Rs 5,000 per 40 kg, the Trading Corporation of Pakistan would initially purchase Rs two lac bales of cotton from cotton ginners so that cotton prices would remain stable.
It should be noted that after the financial year 2005, after a gap of about fifteen years, the federal government has fixed the support price of cotton in the country. Meanwhile, a dispute arose between Pakistan Cotton Ginners Association and cotton brokers over the matter of cotton brokerage.
Copyright Business Recorder, 2021