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KARACHI: The local market on Monday remained stable and trading volume remained low. The Spot Rate remained unchanged at Rs 13900 per maund. The Polyester Fiber was available at Rs 222 per kg.

Cotton Analyst Naseem Usman Business Recorder that the reason behind low trading volume is rains in the cotton growing areas of Sindh and Punjab due which the supply of Phutti was effected.

The rate of cotton in Sindh is in between Rs 13500 to Rs 14000 per maund and the rate of cotton in Punjab is in between Rs 13800 to Rs 14100 per maund.

The rate of the new crop of Phutti in Sindh was in between Rs 5500 to Rs 6100 per 40 kg. The rate of Phutti in Punjab is in between Rs 5700 to Rs 6200 per 40 kg. The rate of Banola in Sindh is in between Rs 1600 to Rs 1750 per maund. The rate of Banola in Punjab is in between Rs 1700 to Rs 1800 per maund. The rate of cotton in Balochistan is Rs 13700 to Rs 13800 per maund. The rate of Phutti in Balochistan is Rs 6300- 6900 per maund.

Around, 1200 bales of Shahdad Pur were sold at Rs 13450 to Rs 13600 per maund, 1400 bales of Tando Adam were sold at Rs 13450 to Rs 13650 per maund, 1800 bales of Khair Pur were sold at Rs 13900 to Rs 14000 per maund, 400 bales of Sarkand were sold at Rs 13900 per maund, 1400 bales of Saleh Pat were sold at Rs 4100 to Rs 4175 per maund, 100 bales of Rohri were sold at Rs 14000 to Rs 14100 per maund, 400 bales of Chichawatni, 800 bales of Layyah, 200 bales of Mureed Wala, 200 bales of Kassowal, 200 bales of Fort Abbas were sold at Rs 14200 per maund, 800 bales of Vehari were sold at Rs 14100 to Rs 14200 per maund, 200 bales of Hasil Pur were sold at Rs 14025 per maund.

Last week, scary projections of trade deficit during the ongoing financial year saw exchange rate close in on its all-time low, with punters predicting early breach of Rs 170 psychological barrier. While, some solely blame bulls gone wild in the global commodity market that may not be the case for cotton. It was only over the weekend that Cotton Crop Assessment Committee finally revised its target cotton production down by one-fifth to 8.46 million bales (of 170kg). Back in July, BR Research had forecast that sowing target for the season may be missed by as much as 18 percent, which made the achievement of 10.5 million bales target almost impossible. This is the lowest area in four decades, and would require average yield of 925 kg per ha, against national highest 815kg per ha, that too achieved a decade ago.

Which makes it look even more optimistic that the CCCAC is still hung up on its initial targeted yield of 769kg per ha. Although news from the farm suggests that the crop has done remarkably better compared to last year thanks to friendly weather, 769kg per ha is a far cry versus last year's 541kg national average yield! After all, growers would consider productivity gains by even 25 percent (over last season) substantial improvement, and the final tally may fall somewhere between 650kg- 675kg per ha.

Of course, when it comes to cotton, both the federal ministry and the minister tend to give in to nostalgia, as higher yields over 750kg per ha (last witnessed in FY18) do not seem such a distant memory to them.

However, there is only so much weather can do to salvage yield in absence of quality seeds. Average germination rate is reported to have fallen to as low as 60 percent in recent years, making significant gains in productivity unlikely.

In fact, USDA FAS estimates yield to close in at 545kg per ha, which means the country may be looking at seasonal output of no more than 6.5 million bales (of 170 kg). However, USDA and GoP estimates have begun to drift further apart in recent years, and it is pertinent to note that USDA's current year forecast is 22 percent higher than its estimate for the previous year.

Market intelligence attributes the variance to a combination of under reporting by ginners and GoP's romance for cotton's glorious past, but that lament has received sufficient attention in this space (and not nearly enough by the government). The net result, however, is that estimates by everyone lose credibility, and add to uncertainty in the market.

Copyright Business Recorder, 2021


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