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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 13500 per maund. The local cotton market witnessed some correction after bullish trend. The trading volume remained satisfactory.

Cotton Analyst Naseem Usman told Business Recorder the rate of cotton in Sindh is in between Rs 13400 to Rs 13500 per maund. The rate of cotton in Punjab is in between Rs 13600 to Rs 13700 per maund. The rate of the new crop of Phutti in Sindh was in between Rs 5500 to Rs 6000 per 40 Kg. The rate of Phutti in Punjab is in between Rs 5500 to Rs 6100 per 40 Kg. The rate of Banola in Sindh is in between Rs 1750 to Rs 1850 per maund. The rate of Banola in Punjab is in between Rs 1750 to Rs 1900 per maund. The rate of cotton in Balochistan is Rs 13400 to Rs 13600 per maund. The rate of Phutti in Balochistan is Rs 5900- 6300 per maund.

800 bales of Khadro were sold at Rs 13450 to Rs 13575 per maund, 800 bales of Mir Pur Khas were sold at Rs 13450 to Rs 13500 per maund, 3000 bales of Sanghar were sold at Rs 13450 to Rs 13650 per maund, 240 bales of Nawab Shah were sold at Rs 13450 to Rs 13600 per maund, 3200 bales of Tando Adam were sold at Rs 13500 to Rs 13600 per maund, 1800 bales of Shahdad Pur were sold at Rs 13450 to Rs 13650 per maund, 1000 bales of Kotri were sold in between Rs 13450 to Rs 13550 per maund, 600 bales of Burewala were sold at Rs 13700 to Rs 13800 per maund, 800 bales of Chichawatni, 1000 bales of Dera Ghazi Khan, 600 bales of Ghazi Ghat were sold in between Rs 13750 to Rs 13800 per maund, 1000 bales of Haroonabad were sold in between Rs 13750 to Rs 13900 per maund, 400 bales of Khanewal were sold at Rs 13800 per maund, 1000 bales of Rajan Pur were sold at Rs 13750 to Rs 13800 per maund, 400 bales of Hasil Pur, 200 bales of Pir Mahal were sold at Rs 13800 per maund and 600 bales of Mian Chanu were sold at Rs 13800 to Rs 13900 per maund.

Cotton prices are touching new highs in the local market amid a fall in local production, delay in cotton shipments from abroad and rising dollar-rupee disparity.

The Karachi Cotton Association quoted Rs 13,580 per maund as the spot rate for the white lint, while the seed cotton rates prevailed between Rs 5,200 and Rs 6,200 per maund on Wednesday.

The ex-gin price in Karachi was Rs 8,550 per maund and seed cotton rates hovered between Rs 4,000 and Rs 4,500 per maund a year ago. The average seed cotton price during 2020-21 remained Rs 5,016 per maund.

Karachi Cotton Brokers Forum chairperson Naseem Usman says these are the highest rates since 2010-11 when the prices had crossed the Rs 14,000 per maund mark. Karachi Cotton Brokers Forum claims rates are the highest since 2010-11.

Production loss due to declining cotton acreage and yield, an unexpected shortage in the local market because of delays in import delivery, rising freight charges, negative crop outlook reports from neighbouring countries, mounting dollar-rupee disparity are being considered major factors behind the bullish trend in the local cotton market. And this trend will not relent in the near future, it is believed.

A textile miller, who requested not to be named, says the local industry is in hot water these days for unlike in the past, cotton price in the international market has become almost equal to the 'costlier' local one. "We have purchased almost 11 million bales of cotton from abroad but the shipment is facing delays mainly due to Covid-19 restrictions. The delay is impacting the local market as we have to meet our requirements from the domestic sources until the arrival of the imported raw material." He says they are forced to make local purchases to keep their units running but the domestic cotton is short in staple and poor in quality for being contaminated.

The ginning industry prophesies further doom. Muhammad Junaid Iqbal, a ginner from Rahim Yar Khan District, says seed cotton rate in Punjab markets is being quoted up to Rs 6,200 per maund these days, and fears it may go up to Rs 7,000 if shipments from abroad are further delayed.

Referring to crop reports emanating from neighbouring cotton producing countries, he says heavy monsoon has damaged between 20 and 25 per cent of the crop in India, whereas it is also suffering from harsh weather in China. This will add stress to the local market.

Usman from the Karachi Cotton Brokers Forum says continuing rupee slide against dollar and increasing freight charges are making imported cotton expensive, thus the textile millers are turning to local purchases because uncertainty rules both in the dollar rate and arrival of shipments because of corona virus-related hurdles across the world.

Pakistan harvested 5.6 million cotton bales last season, the lowest in the 30 years, while the textile industry needs at least 15 million bales. It will have to import around nine million bales to meet the shortfall.

According to World Bank's commodity markets outlook, global cotton prices continued their upward rally in July 2021, reaching its highest level in at least 9 years. Cotton 'A' index breached $2.15 per kg during the month and has since stayed in the territory. Cotton prices have rallied since the great commodity crash of April last year, rising by 55 percent since their bottom over the past 16 months. In fact, cotton prices are already 30 percent higher than their pre-pandemic levels. This is one of the highest rises within agricultural commodities, outside of maize and edible oil crops.

It appears that the commodity analyst's community is divided over how long the cotton price bonanza may last. While many have been quick to ascribe the broad-based rise in various commodity prices to global supply chain disruptions, it now seems that the great cotton rise has taken on more solid roots. USDA projects global cotton consumption for marketing year 2021-22 at nearly 27 million metric tons, highest since at least 2007-08. At that time, the global financial crisis that hit world markets in September 2008 quickly tampered commodity demand, bringing down world consumption precipitously by over 11 percent within a year. Most indicators suggest that a similar correction may not be on the cards for the foreseeable future this time around.

First, world cotton consumption has already been on the rise throughout Covid year, as 2020-21 witnessed a 15 percent rise in consumption led by quicker than expected re-opening of industrial base in China and efforts by various governments across the developing world to prop up export base, benefiting textile exporting companies. Moreover, national commodity procurement operations program continued unabated in major cotton producing regions such as India and China, as governments not only sought to top up strategic reserves during uncertain times but also used the procurement operations to roll out support to farming communities (India).

The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 13500 per maund. The Polyester Fiber was available at Rs 222 per Kg.

Copyright Business Recorder, 2021

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