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KARACHI: Bullish trend continues in the rate of cotton. The rate of cotton reached at the highest level of Rs 19000 per maund. The Spot Rate after increasing by Rs 600 per maund closed at Rs 18000 per maund. During one year the rates of cotton and cotton-related products are increased from 70 percent to 100 per cent. Bullish trend was also witnessed in international cotton markets. Textile business shows a growth. Pakistan Cotton Ginners Association has protested against imposition of 17 percent sales tax on cotton and the products prepared from cotton.

In the cotton market during the last week textile and spinning sectors were involved in cautious buying while ginners were hesitant to sell cotton due to expected increase in the rate of cotton, as a result of which unexpected increase was witnessed in the rate of quality cotton. The rate of quality cotton in Sindh reached at the historic highest level of Rs 19000 per maund while the rate of quality cotton in Punjab reached at the highest level of Rs 18500 per maund. According to the ginners it is possible that the rate of cotton to reach Rs 2000 per maund.

It is expected that this year 75 lac bales will be produced in the country as compared to the last year’s production of 56 lac bales. Despite the expected production of some 20 lac more bales, as sharp increase was witnessed in the rate of cotton.

According to analysts, this year the rate of cotton in Sindh is Rs 7000 to Rs 8000 more as compared to the rate of last year on December 31, 2020 when the rate of cotton was Rs 8800 to Rs 10,200 per maund. The rate of cotton on December 31, 2021 was in between Rs 15000 to 19000 per maund. In the same way the rate of Phutti which was in between Rs 3800 to Rs 4200 per 40 kg on December 31, 2020 was in between Rs 5000 to Rs 8200 per 40 kg on December 31, 2021, witnessing an increase of Rs 1200 to Rs 1300.

The rate of cotton in Punjab on December 31, 2020 was in between Rs 9500 to Rs 10,400 per maund. It was in between Rs 16000 to Rs 18500 per maund on December 31, 2021 after witnessing an increase of Rs 6500 to Rs 8100. The rate of Phutti which was in between Rs 3800 to Rs 5100 per 40 kg on December 31, 2020 was in between Rs 5800 to Rs 8400 per 40 kg on December 31, 2021, witnessing an increase of Rs 2000 to Rs 3000. The rates of Banola, Banola oil and Khal witnessed an increase in the same ratio. The Spot Rate of the Karachi Cotton Association on December 31, 2020 was Rs 9900 per maund but on December 31, 2021 it was Rs18000 per maund, witnessing an increase of Rs 8100. In this way over all increase of 70 percent to 100 per cent was witnessed in the rates of cotton, Phutti and Spot rate.

In many ways rates of cotton, cotton yarn and textile products witnessed an increase of 70 per cent to 100 per cent. During this period textile spinners earned a record profit. According to the experts in 2021 all the people related with cotton including farmers, spinners and miller’s earned a record profit.

The farmers in past were hesitant to grow cotton but now they will grow more cotton. It is expected that cultivation area of cotton will increase, as well as, production of cotton. Experts say that government departments should work on war footings to increase the production of cotton because in the coming years it is expected that demand of cotton may increase due to increase in number of the textile mills.

Although, it is expected that cotton will be imported in a large quantity, it is premature to say anything regarding the rates of cotton in international market. However, it is expected that the rates of cotton will be stable. Local textile sector will have to be cautious because there may be some political instability in the country. There is uncertainty regarding rate of dollar, arrival of imported cotton is going on through there are some issues of shipments.

The rate of cotton in Sindh is in between Rs 15000 to Rs 19000 per maund. The rate of Phutti, which is available in limited quantity, is in between Rs 5000 to Rs 8200 per 40 kg. The rate of Banola is in between Rs 1500 to Rs 2400 per maund.

The rate of cotton in Punjab is in between Rs 16000 to Rs 18500 per maund. The rate of Phutti is in between Rs 5500 to Rs 8400 per 40 kg. The rate of Banola is in between Rs 1700 to Rs 2400 per maund. The stock of cotton and Phutti is almost over in Balochistan.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that there is an unprecedented increase in the rate of cotton in international market. The Rate of Promise (Waday Ka Bhao) of New York Cotton after fluctuations increased by 5 American cents and closed at 112.40 cents.

As per weekly export of USDA, more than one lac ninety two thousand bales of cotton were sold which was twenty one per cent more as compared to the sale of last week. This time too China was on number one with more than sixty nine thousand bales, Turkey was number two with thirty eight thousand bales, and Indonesia was on number third with thirty thousand bales while Pakistan was on number fourth with eighteen thousand bales.

In Pakistan an international organisation was selling cotton. The organisation had bought six lac bales from the market and up till now has sold three lac bales. Ginners had limited stock left. According to the sources it is expected that all stock will be sold till January. Sources claimed that there might be cotton crisis in the country in the month of February. Partial arrival of cotton will be expected in six months.

Moreover, despite coronavirus pandemic, the year 2021 proved to be excellent for textile sector. Exporters take full advantage of government’s relief package which includes permission to do business while implementing SOP’s.

The year 2021 jolted the whole economy of the world. Pakistani economy was also under a lot of pressure but Pakistani exporters successfully captured the international market. Pakistani exports during July 21 to November 21 were in between 12.344 billion dollars. In exports, the textile sector had a major share. According to the industrialists the reason behind exports is government’s energy package.

Manufacturers have taken orders of worth billions of dollars by finding new customers in international market while for completion of the orders two thousand jet looms were part of the textile industry. They were of the view that due to different government relief packages, the cost of production of textile sector has reduced which helped a lot in preparation of export orders

The year 2021, has proved to be very successful year for the exporters. However, the dollar and the price of energy affected the industry. If the government gave relief package to the small industry and bring down the prices of dollar and electricity then the year 2022 will also be proved successful for the local industry.

Chairman Pakistan Cotton Ginners Association Sohail Mahmood Harl told that there was already 17% sales tax on Cotton and Cotton oil. The government had assured the association that sales tax will be abolished on these items but finance minister Shaukat Tarin in his ‘mini-budget’ speech instead of announcing abolishing sales tax on these items proposed sales tax on remaining cotton-related items like cotton seed, cotton seed cake.

Harl said that it will be impossible for the ginning factories to carry on their businesses in the presence of these taxes.

Copyright Business Recorder, 2022

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