LAHORE: The local cotton market on Thursday remained dull while the trading volume remained low. Cotton Analyst Naseem Usman told that the rate of cotton in Punjab and Sindh is between Rs 18000 to Rs 21,000 per maund.
He also told that the import of cotton in India has been fully exempted from customs duties. This exemption shall benefit the textile chain and provide relief to consumers.
Pakistan Textile Exporters Association (PTEA) has cheered the PLM-N’s leadership on the formation of Government and expressed the hope that the new Government would forge export-oriented policies to stabilize the crumbling economy and lead the country towards economic prosperity.
Congratulating Prime Minister Shehbaz Sharif, here on Wednesday, Chairman Pakistan Textile Exporters Association Sohail Pasha urged the government to give top priority to boost economy as Pakistan could not make sound progress without turning around its sagging economy.
He was optimistic that country’s new leadership would live up to the expectations of the people in achieving national goals and our beloved country will record tremendous achievements in its economy, democracy and foreign relations.
He said that all stakeholders should be taken on board to make viable and prudent economic policies to accelerate growth and speed up industrialization across the country. Industrial hopes are on very high notes and country has been in need of serious and talented leadership that can address the challenges and trigger economic revival for a long time, he said.
Reposing full confidence in new leadership, he expressed the hope that PML-N Government would gather a team of economic experts from all sectors of the economy to formulate business friendly policies and bring economic reforms to boost the trade and industry. Prime Minister Shehbaz Sharif has the ability to face challenges and steer Pakistan towards economic prosperity.
Meanwhile, last month, BR Research had highlighted that Pakistan’s cotton imports during the 2021-22 marketing season appear to be witnessing major correction, declining by 12 percent during 8MFY22 (over same period last year). This assessment has now found vindication in the latest world cotton outlook by USDA, which has revised down its forecast of Pakistan’s imported cotton demand by 6 percent. (For more, read “Cotton imports: major correction underway?” by BR Research, published on 24 March, 2022).
It seems that the relentless rise in cotton prices globally has put a dampener in demand for imports, as prices have now officially touched a 130-months high. But global cotton price spiral is finally calming. According to World Bank data, cotton was among the few major cash crops to not witness a significant price jump in March 2022, in the aftermath of Russian invasion of Ukraine the same month. The two warring countries are not major producers of cotton, while import of made-up textiles and apparel by Russia and Ukraine is valued at a measly $3.5 billion, against total world trade of $800 billion!
Therefore, cotton prices have remained relatively unaffected by the military conflict which sent prices of other crops such as wheat, corn, and edible oils (palm, canola, and soy bean etc) up by as much as 20 percent between Feb and Mar 2022. The trend is likely to persist in the near-term, especially as world demand forecast remains unchanged. World supply-demand gap seems to have been met at the moment, and may stay so until the next harvest season begins in major producing regions such as China, India, US, Brazil, and Australia during Jun – Sep quarter.
Saqib Naseem, chairman of Pakistan Yarn Merchants Association (PYMA), and Muhammad Junaid Teli, Vice Chairman of Sindh and Balochistan Region, have said increase the higher interest rates will significantly increase the cost of industries threatening the survival of SMEs.
They urged the Governor State Bank Reza Baqir for immediate reduction of interest rates in the best economic interest of the country and urged to formulate a policy that promotes business and industrial activities not destroyed.
“The Covid-19 epidemic already had a devastating effect on business and industries, the recent political crisis in the country has also troubled the business community as no one at the government level cared about saving businesses and industries from destruction and they were busy only in politics, while now the 250 basis points increase in interest rates by SBP will sink the economy”, they pointed out.
They further said that due to the increasing business costs, it was becoming difficult to do business and run the industries. Therefore, the governor SBP should take any decision keeping in view the political situation and the economic condition in the country so as not to affect the business and industrial activities.
In order to avoid anti-economic decisions, they urged the Governor SBP Reza Baqir, to consult with the business community before making any future decisions.
Saqib Naseem and Junaid Teli also demanded governor SBP to announce a significant reduction in interest rates which are imperative for the development of the country.
ICE cotton futures reversed course to jump more than 3% to their highest in over a decade on Wednesday as India’s decision to allow duty-free imports boosted the bullish outlook for the natural fibre.
Cotton contract for July was up 4.26 cents, or 3.1%, at 141.76 cents per lb by 01:22 p.m ET. The May ICE cotton futures rose 4.46 cents, or 3.2%, to 142.97 cents.
Both contracts hit their highest since 2011, erasing losses from earlier in the session amid pressure from broader grains markets.GRA/
“The price rise is a reflection of the import of cotton from India or the custom duties being lifted from that market. So, we expect further demand out of that country,” said Valentin Olah, cotton risk management consultant at StoneX Group.
India has allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in production.
“The notable drought situation in the southern parts of the US, smaller Indian crop, and on-call sales are some supporting factors,” said Louis Barbera, partner and analyst at VLM Commodities Ltd.
The Spot Rate remained unchanged at Rs 20,500 per maund. Polyester Fiber was available at Rs 290 per kg.
Copyright Business Recorder, 2022