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KARACHI: Cotton prices continued to decline last week. International textile sector faces a severe recession. The local textile sector is also in a severe crisis. There will be severe shortage of seed for sowing cotton next year.

However, Cotton Brokers Association President and Vice President have fruitful discussion with chairman All Pakistan Textile Mills Association for the revival of cotton.

International Cotton Association held workshops in collaboration with Karachi Cotton Association in Karachi and Lahore for creating awareness about cotton import. Pakistan Cotton Ginners Association seeks to resolve the ginners’ issues.

In the local cotton market, cotton prices continued to fall due to cautious buying of cotton by textile spinning mills during the last week. Due to increase in sales by ginners, a decreasing trend in the rate of cotton continued. The rate of cotton witnessed a decline of Rs 500 to Rs1000 per maund, while the business volume was also very low.

Many ginners have stock of cotton which they could not sell at higher prices due to which there is uncertainty among the ginners. Textile mills, which had previously bought cotton at higher prices, are now in trouble due to the fall in prices in local and international markets. There is a recession in the local and international market due to decrease in the demand and prices of cotton yarn and textile products.

On the other hand, the price of cotton in the international cotton markets has also continued to fall. Big textile groups are again going towards import of cotton from abroad because the quality of local cotton is relatively low and the price is high.

The rate of Future Trading of cotton has fallen to a low of 79 American cents per pound. Some experts believe it could fall further. For this reason, textile spinners are very cautious in buying.

However, the textile sector is in a state of crisis due to the very low export of textile products. According to the sources, currently about 50 percent of the textile sector in the country is closed, only some mills are partially running. Similarly, the textile sector in India, Turkey, Bangladesh and Vietnam is in crisis. According to the information received from there, the textile sector is 40 to 50% closed and if the same situation persists then it is expected that more mills will be closed down soon.

Due to the heavy rains and devastating floods in the country, the cotton crop has been badly damaged. In the past few days, Amir Naseem, along with the cotton brokers and the people associated with the cotton business visited the cotton producing areas of Sindh and Punjab.

According to the analysis of the Sindh province, there has been a heavy loss of crops. Many farmlands have been totally destroyed, while where some crops were sown, plants have turned black. According to the analysis, the cotton crop is expected to be around 55 lac bales this year.

Due to the dullness in the cotton business, the exporters of cotton yarn, textile products, garments, etc., are facing a lot of difficulties. Payments of many ginners and land traders are also stuck, due to which there is a severe crisis in the market.

The rate of cotton in Sindh is in between Rs 15,000 to Rs 18,000 per maund. The rate of Phutti is in between Rs 5,000 to Rs 8,200 per 40 Kg. The rate of cotton in Punjab is in between Rs 15,500 to Rs 18,500 per maund while the rate of Phutti is in between Rs 6500 to Rs 8700 pet 40 Kg. The rate of cotton in Balochistan is in between Rs 17,000 to Rs 18,000 per maund. The rate of Phutti is 7000 to Rs 9000 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 500 per maund and closed it at Rs 17,000 per maund.

Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that the decline in the price of cotton in the international cotton markets continues. The rate of Future Trading of New York cotton for December has decreased to a low level of 79 American cents per pound. According to experts, it will decrease further.

According to USDA’s weekly export and sales report, sales for the year 2022-23 were 84,500, including a decrease of 60,300 (-42%) bales.

Pakistan topped the list by purchasing 27,600 bales (-50%). Egypt bought 22,000 bales and came second. China bought 10 thousand 100 bales and came third.

For the year 2023-24, 30,400 bales were sold, including a decrease of 44,000 (-87%) bales. Portugal was at the top by buying 2,200 bales. Pakistan bought 2200 bales and came second.

However, Senior Vice Chairman PCGA Abdul Mohiman Khan (Bilal Khan) met federal minister Syed Khursheed Shah in Islamabad. In the meeting, he informed about the problems faced by the PCGA, especially the 17% sales tax on Binola and the fixed charges imposed by Nepra. Khursheed Shah assured that he will try his best to solve these problems.

In this regard, in a cabinet meeting, he spoke about the elimination of 17 percent sales tax on Binola, on which Prime Minister Mian Muhammad Shehbaz Sharif gave his remarks and assured that the tax imposed on Binola will be abolished. It was told that a complete procedure is followed, and the sales tax on Binola is levied under the Finance Bill from the Ministry of Finance, which is approved by the National Assembly. Since the Finance Minister is not here now, as soon as he comes, they will get approval from the Finance Ministry and the National Assembly to abolish the 17% sales tax on Binola.

Pakistan Cotton Brokers Association Chairman Muhammad Kashif Islam and Vice Chairman Aamir Naseem met the Chairman of APTMA Asif Inam. There was a lively discussion on the problems faced by the cotton trade. Chairman APTMA assured his full support for the development of cotton trade in Pakistan and also assured for evolving a mechanism in order to systemize the trade of cotton. He assured that if the Pakistan Cotton Brokers Association is willing to hold a meeting of all stakeholders to bring the cotton business into a better system, APTMA will fully participate in it.

In collaboration with Karachi Cotton Association KCA and International Cotton Association (ICA) workshops were organized in Karachi and Lahore in order to create awareness among the importers regarding cotton import.

Copyright Business Recorder, 2022

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