KARACHI: Extraordinary decrease of Rs1500 to Rs2000 per maund in the rate of cotton. The Spot Rate decreased by Rs800 per maund.
The production of cotton increased by 2.5 million bales. It is expected that 7.5 million bales will be produced in the country and almost 7.5 million bales will be imported from abroad to fulfil the needs of the local industry. Up till now agreements for the import of 4.5 million bales of cotton have been signed.
In the local cotton market during the last week extraordinary bearish trend witnessed as in the commodities’ market worldwide due to threats of Omicron virus. Significant decrease of Rs1500 to Rs2000 per maund in the prices of cotton was witnessed due to which ginning factories had left with a significant stock of cotton.
There is panic among the ginners while textile spinners had stopped buying due to the fear of further decline in the rate of cotton. The Rate of Promise (Waday ka Bhao) of New York Cotton after witnessing a significant decline of 14 American cents reached at 104 American cents.
According to the experts it is expected that prices of cotton internationally may further decline due to the increasing threat of Omicron virus. At this time ginners, traders of Phutti and farmers had the stock of only 0.8 million bales in their hand. The supply of Phutti had almost ended in the province of Sindh while the quality of Phutti is also deteriorating.
This year the cotton season started one month earlier while the season will also end earlier. Textile mills had signed import agreements in very large numbers from abroad and the delivery of imported cotton has also started due to which mills had to pay their due amounts. Due to delay in delivery by textile producers there is a delay in the payment of cotton yarn.
Financial crisis arises in the market as the limits of the banks are ending. One reason behind is extraordinary increase in the rate of dollar. However, it is expected that 7.5 million bales will be produced while the demand of the mills is around one crore sixty lac bales. In this way around 7.5 million bales will have to be imported from abroad to fulfil the demands of the local industry.
Experts were of the view that there will be no problem regarding sale of cotton because of low production but there will be a problem regarding price of cotton. The rate of cotton is already high so the ginners were not in favour of stocking the cotton.
The rate of cotton in Sindh as per quality decreased by Rs1500 to Rs2200 per maund and was available at Rs13500 to Rs16500 per maund. Phutti which was left in very small quantity was available at Rs 4500 to Rs 6800 per 40 kg. The rate of Banola remained in between Rs1350 to Rs2200 per maund.
The rate of cotton in Punjab as per quality also decreased by 1000 to Rs 1500 per maund reached at Rs 15000 to 16500 per maund. The rate of Phutti was in between Rs 5500 to Rs 7100 per 40 kg. The rate of Banola was in between Rs 1400 to Rs 2200 per maund.
The rate of cotton in Balochistan is in between Rs 15000 to Rs 16500 per maund. The rate of Phutti was in between Rs 6200 to Rs 8400 per 40 kg. The rate of Banola remained in between Rs 1500 to Rs 2300 per maund.
The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 800 per maund and closed it at Rs 16700 per maund. Chairman Karachi Cotton Brokers Forum Naseem Usman told that market remained under extraordinary bearish trend.
The Rate of Promise (Waday ka Bhao) of New York Cotton after reaching at the highest level of 1.18 dollar then after dipping reached at the lowest level of 1.02 American cents. However, as per USDA export report more than 300,000 bales were sold which was 90 percent more as compared to last week. This time Vietnam was on top with more than 1 lac fourth seven thousand bales while China was on number second with one lac twenty three thousand bales while Pakistan was on number third with more than thirty six thousand bales. Moreover, bearish trend prevails in the India, Brazil and Central Asian states while in Africa due to the new wave of coronavirus the supply of cotton had almost stopped.
Seed cotton (Phutti) equivalent to over 7.168 million or exactly 7,168,118 bales have reached ginning factories across the country till Dec 1, 2021, registering a 54.22 per cent increase compared to corresponding period last year.
According to fortnightly report of Pakistan Cotton Ginners Association (PCGA) released to media on Friday, Punjab arrival figures stood at 3.67 million or 3,679,016 bales showing increase by 39.65 per cent while Sindh province registered 73.28 per cent surge with contribution of over 3.48 million or 3,489,102 bales.
Report says Phutti equivalent to just over 7 million or 7,025,515 bales has undergone the ginning and pressing process at factories. Over 6.69 million or 6,694,591 bales have been sold out with major chunk of it, 6.67 million (6,678,591) bales bought by textile mills and 16,000 by exporters. Exactly 473,527 bales were lying unsold at the ginneries.
Sanghar district in Sindh remained on top of the list registering arrival of over 1.3 million or exactly 1,314,672 bales while Punjab district of Bahawalnagar stood second with the figure of just over a million cotton bales.
Total 345 ginning factories were operational in the country including 162 in Sindh and 183 in Punjab. Chairman Karachi Cotton Brokers Forum Naseem Usman while commenting on the report said that it is expected that around 7.5 million bales will be produced in the country while there is no record of 0.8 million bales. It is expected that there is a demand of one crore sixty lac bales in the country and in order to fulfil the demands of local industry agreements for the import of 75 lac bales have to be signed.
According to the private importers of cotton up till now import agreements for the import of 45 lac bales have been signed. The availability of imported cotton will be expensive because of increased rates of shipments and containers, as well as, increase in the rate of dollar. Last year cotton of worth more than one billion dollars was imported but this year it will be more than two billion dollars.
Due to the worsening pandemic situation in Germany over the past two weeks and the associated restrictions, Heimtextil, scheduled to take place in the second week of January, has been cancelled.
Copyright Business Recorder, 2021