KARACHI: The local cotton market overall remained bullish; however, fluctuation of 10 American cent was witnessed in New York Cotton and under its influence the rate of cotton in local market witnessed a fluctuation of Rs 1200.
It is expected that cotton crop may be affected by extreme hot weather and rains. All Pakistan Textile Mills Association demanded has to announce long awaited five-year textile policy. The dependence of textile industry on local cotton will be increased after increase in the rate of dollar. It is expected that 85 Lac bales will be produced in the country and around 70 Lac bales will be imported. Import agreements of almost 35 Lac bales have already been signed.
In the local cotton market during the last week unprecedented fluctuation was observed. After the unprecedented fluctuation of 10 American cents in New York Cotton and under the influence of New York cotton local market witnessed a fluctuation of Rs1200. Overall bullish trend prevailed in the market.
The world market dipped during the first two days the week after the news of bankruptcy of a Chinese company. Under the influence of this news the rate of cotton in New York cotton decreased by 3 American cents and the rate of cotton in local cotton market decreased by Rs 00 per Maund.
Panic among ginners was observed in the market and they had started selling cotton. Keeping in mind the panic among the ginners textile mills acted cautiously and started buying cotton on lower rates. The ginners oversold their cotton and started buying Phutti.
Keeping in mind the situation the traders and farmers decreased the selling of Phutti. On the other hand the supply of Phutti decreased due to the rains in cotton producing areas of Punjab. Ginners started facing problems. Due to decrease in supply the rate of cotton increased by Rs 500 to Rs 600 per Maund.
On the other hand in America due to decline in the rate of dollar the Rate of Promise (Waday ka Bhao) of New York Cotton increased a little bit. In the local cotton market after the increase in the rate of dollar local mills started buying due to which the rates increased.
Moreover, according to the sources of cotton yarn there is a trend of decrease in the rate of cotton yarn. According to the information received from Faisalabad the rate of yarn is still high and looms are facing loss as a result many looms were closing their operations. It is hinted that loom owners were closing their operations for two days in a week in order to avoid losses. It is expected that due to this the rate of cotton yarn may come down.
The rate of cotton in Sindh after fluctuation was in between Rs 11700 to Rs 13500 per Maund as per quality. The rate of Phutti was in between Rs 4200 to Rs 5700 per 40 kg. The rate of Banola was in between Rs 1450 to Rs 1800 per Maund.
The rate of cotton in Punjab was in between Rs 13200 to Rs 13600 per Maund. The rate of Phutti was in between Rs 5000 to Rs 5800 per 40 kg. The rate of Banola was in between Rs 1650 to Rs 1800 per Maund.
The rate of cotton in Balochistan was in between Rs 12800 to 13200 per Maund. The rate of Phutti was in between Rs 6000 to Rs 6800 per 40 kg. The rate of Banola was in between Rs 1600 to Rs 1800 per Maund.
The Spot Rate Committee of the Karachi Cotton Association after fluctuation decreased the rate by Rs 50 per Maund and closed it at Rs 13200 per Maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that there was unprecedented fluctuation in international cotton markets especially New York Cotton witnessed a fluctuation of 10 American cents. On Monday the Rate of Promise (Waday Ka Bhao) witnessed a decrease of 3 American cents due to the news of bankruptcy of a Chinese real estate company. Under the influence of New York Cotton other cotton markets witnessed bearish trend and local cotton market witnessed a decrease of Rs 700 per Maund in the rate of cotton. A crisis like situation and panic prevails in the market.
After that news of hurricane in America and increase of 22% in American exports according to USDA weekly export report as compared to last week the Rate of Promise (Waday Ka Bhao) of New York Cotton reached at 96 cents which is highest in 10 years.
More over due to shipment crisis, the exporters of cotton of Brazil had partially stopped the export of cotton to many countries because there is unprecedented delay in delivery of already signed agreements. The rate of cotton in China, Central Asia and Africa remained stable while there is a delay in arrival of Phutti from the Indian province of Gujarat due to rains which is the biggest producer of cotton. There is information that rains have also effected the crop a little bit. Cotton Cooperation of India had started partial buying of cotton on MSP rate.
Commerce Ministry on Thursday is ready to support imposition of Regulatory Duty (RD) on export of cotton yarn, aimed at encouraging value addition in Pakistan.
Senior officials of Commerce Ministry showed this willingness in an informal chat subsequent to a formal meeting of National Assembly's panel which met with Khurram Shahzad MNA in the chair.
"Pakistan exported cotton yarn worth $ 1 billion during 2020-21 to different countries including China. If this yarn had been used for value addition, Pakistan could have exported value-added goods," said, Muhammad Ashfaq, Joint Secretary (Tariff Policy) Ministry of Commerce.
He suggested that National Assembly panel should recommend imposition of duty/ RD on export of cotton yarn, adding that the Commerce Ministry will support the proposal.
His views were also supported by Additional Secretary (Trade Diplomacy) Syed Hamid Ali, who stated that Commerce Ministry will endorse the proposal.
Khurram Shahzad MNA argued that cotton yarn worth $ 1 billion could manufacture cloth of $14billion which could be exported instead of exporting only cotton A team of All Pakistan Textile Mills Association (APTMA) headed by its Chairman, Rahim Nasir noted that textile exports are likely to touch $ 21 billion during 2021-22; and that cotton production will be over 8.5 million bales this year as the crop is better than before.
Chairman APTMA said that Pakistan has to go for corporate farming to get better yield as is being done in other countries, adding that there should be a consistency in policies. He said cotton production has been declining for the last 15 years. Cotton production per acre in Pakistan is less than in the neighbouring and developed countries, he added.
The meeting was informed that APTMA has established a Cotton Foundation to develop better quality cotton seeds as the yield of other countries is far higher than Pakistan. The Foundation will develop cotton which will be virus-free and also in accordance with local weather conditions. Technology will also be imported for this purpose.
APTMA's Consultant, Dr. Javed commented: "I have visited several cotton fields and met with farmers. Those who use pesticides of multinational companies are getting better yield, whereas those who use local pesticides or counterfeit seeds are facing substantial losses."
Chairman APTMA did not support the imposition of RD, saying that if support is extended to one industry at the cost of another industry, it will not succeed.
"Policy should be formulated in such a way that the cost of production is reduced. We have to make a consistent chain," he maintained.
The Convener of the panel said unprecedented incentives have been given to the exporters but exports are not increasing.
Chairman APTMA replied that textile exports have posted growth of 28 per cent on year to year basis whereas they were 45 per cent higher on month-to month basis.
He said, 28 per cent growth is a very good number and if someone thinks growth should be 50 to 60 per cent, it is not possible. He said energy availability should be at par across the country to keep cost equivalent.
The impact of Temporary Economic Refinance Facility (TERF) will be seen in years to come as the industry is just going for expansion, the panel noted.
Khurram Shahzad raised the issue of tariff protection to a couple of chemical industrie Chairperson National Tariff Commission (NTC) Robina Khalid said that protection of this will be reduced gradually.
The panel decided to invite officials of Ministry of National Food Security and Research and agriculture scientists in its next meeting for a comprehensive briefing on seeds. Besides others, the meeting was attended by Syed Javed Ali Shah Jillani MNA and Sajida Begum MNA.
Copyright Business Recorder, 2021