KARACHI: The rate of local cotton remained stable. Bullish trend prevailed in international cotton markets. There was almost no stock of cotton with the ginners and trading of cotton was going on between the mills. Uncertainty in the local and international cotton markets prevailed. After the harvesting of wheat, a partial sowing of cotton will start.
There is a need to speed up the efforts for increasing the production of cotton. Government should show seriousness towards Cotton Authority of Pakistan. It should not show non seriousness like it showed in the case of Cotton Task Force. Pakistan Cotton Ginners Association should actively work for the interest of ginners.
As per details, in the local cotton market during the last week overall the rate of cotton remained stable. Mills were involved in cautious buying due to high rates of quality cotton while ginners also had a limited stock of cotton. Up till now there is no parity between the cotton and cotton yarn. On the other hand an international organisation had the stock of cotton and was selling its stock but its deals were not reported. However, some mills were also selling cotton which was also not reported. Trading volume is very low. Some mills were selling cotton on credit. Some mills were cautious in buying due to delay in shipments due to Russia and Ukraine war while some mills were involved in buying.
On the other hand, there was stability in the international cotton markets. Though there is uncertainty due to Russia and Ukraine war. People were also cautious due to political uncertainty in Pakistan. The rate of cotton yarn is decreasing and the financial crunch is increasing in the market. There is uncertainty about future. It is expected that there would be some increase in the business of garments and textile products at the local level because of Eid and Ramadan but the market sources are saying that this year business will be slower due to inflation.
The rate of cotton in Sindh is in between Rs 18,000 to Rs 20,000 per maund. Trading of cotton was going on high rates on credit. All the ginning factories were closed because of off season. Trading of a limited stock will remain continued.
According to the information received from lower Sindh in some areas sowing of cotton has started. There were rumours that there was some trading of Phutti in these areas on the condition of delivery in the last days of May and first week of month of June but deals based on future trading were not trustworthy.
The Spot Rate Committee of the Karachi Cotton Association has kept stable the rate at Rs 20,000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that after fluctuation in the international cotton market a bullish trend prevails. At the end of the trading week the rate of Future Trading of New York Cotton witnessed an unprecedented increase of four cents. According to the USDA weekly export report of week of 2021-22 three lac fifty four thousand bales were sold which was two percent more as compared to the sales of last week. China was on number one with more than one lac seventy thousand bales. Turkey was on number second with seventy thousand bales while Pakistan was on number third with more than forty nine thousand bales. The rates of cotton in Brazil, Central Asia, Africa and India, overall, remained stable. After bearish trend for the whole week a bullish trend prevails in the market after the coming of the news that China has issued new import quota.
Moreover, confirmation of an extended La Nina condition this summer from NOAA ran the market higher. For the most part, the main buyers were speculators.
Friday afternoon, the CFTC will update the stance of various speculators. The most watched-group are the managed-money index funds. At last count there were some 77,500 contracts.
The new crop market continues to anticipate the prospective plantings report on March 31. Tabulators are gathering that data now. Already there have been private surveys which have shown increased acres for 2022, but given the potential adverse weather and the higher input costs, acres may be not as great as initially thought.
On Friday the rate of Future Trading for the month of May after increasing by 4.17 cents closed at 121.03 cents while the rate of July closed at 116.79 cents after increasing by 3.79 cents.
Moreover, Prime Minister Imran Khan had announced to establish Cotton Authority of Pakistan but the basic components and characteristics of the authority were not shared by the government.
It is suggested that the government should consult All Pakistan Textile Mills Association, Pakistan Cotton Ginners Association, Karachi Cotton Association, and take benefits from their experiences. Government should also take benefits from the officers of seventy year old Pakistan Cotton Crop Committee. Pakistan Cotton Ginners Association should evolve a strategy for the solution of the issue of imposition of 17 percent sales tax on cotton and cotton-related products before the start of next season.
Copyright Business Recorder, 2022