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KARACHI: A bullish trend in cotton prices was seen on cotton market and the spot rate was hiked by of Rs500 per maund. The supply of Phutti is increasing day by day, as the cotton crop is satisfactory.

However, import contracts of 60 lac bales of cotton worth 2 billion dollars have already been made. Funds of only Rs 147 million have been allocated in the budget for better production of cotton.

Chairman Cotton Ginners Forum Ahsanul Haq has said concessions were given for the agriculture sector in the budget but no relief was given to cotton ginning sector.

In the local cotton market, ginners oversold cotton during the past week due to which a bullish trend prevailed in the market. The deals of new crop of cotton were finalised between Rs 20,500 to Rs 21,300 per maund after witnessing an increase of Rs 8,00 to Rs 1200 per maund.

The rate of Phutti was Rs 9,500 to Rs 10,000 per 40 kg. The rate of Phutti witnessed an increase of Rs 7,00 to Rs 1,000 per 40 kg because of partial functioning of many ginning factories. The market; however, witnessed a downward trend on Saturday evening.

At present, due to the exceptionally good quality of cotton, textile spinners are not interesting in selling cotton before Eidul Azha and before the rains, which is the reason behind the increase in the price of cotton.

According to the estimates around 40 ginning factories of Sindh and Punjab were partially functional, while mills were also showing interest in buying.

At present, the cotton crop is satisfactory and if the weather conditions remained favourable, the experts expect the production to be around 1 Crore bales. However, it is too early to say anything.

The situation of the textile sector is not good as its crisis is increasing day by day. On the other hand, the recession also continues internationally. According to the analysis of Naseem Usman, chairman of the Karachi Cotton Brokers Forum, currently the country’s textile spinners have signed import contracts of about 60 lac bales of cotton for 2022-23. However, delivery of more than seven teen lac and fifty thousand bales is currently pending.

If the average price of imported cotton is calculated at 95 US cents, the total value is about two billion US dollars. The worth of cotton imported from USA is more than one billion US dollars.

The rate of cotton in Sindh and Punjab after witnessing an increase of Rs 8,00 to Rs 12,00 per maund is in between Rs 20,500 to Rs 21,300 per maund. The rate of Phutti after witnessing an increase of Rs 1,000 to Rs 12,00 per 40 kg is in between Rs 9,500 to Rs 10,000 per 40 kg. There is an increasing trend in the rate of Khal and Banola. The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 5,00 per maund and closed it at Rs 20,500 per maund.

Naseem Usman said that the international cotton market remained stable, overall. According to the USDA Weekly Export and Sales Report for the year 2022-23, four lac and eighty thousand and four hundred bales were sold.

China was at the top by buying three lac and eighty four thousand and seven hundred bales. Pakistan bought fifty one thousand and six hundred bales and stood second. Turkey bought eighteen thousand and eight hundred bales and came third.

Thirty thousand and eight hundred bales were sold for the year 2023-24.

Turkey bought twenty thousand and seven hundred bales and was on top of the list. Peru bought 4,000 bales and came second. Guatemala bought 2,700 bales and was in third place.

Meanwhile, at present cotton sowing in the country has been completed on 2.588 million hectares as against the target of 2.767 million hectares for the crop season 2023-24 to meet the industrial and commercial needs of the local industry, as well as, for exports.

The farming community in the crop producing areas has completed cultivation of over 93.53% of the total area set for the season to achieve a production of 12.77 million bales till the first week of this month (June).

Sowing of the crop in Punjab has been completed on 95.11% area on 1.920 million hectares against the set target of 2.019 million hectares to produce about 8.336 million bales during the current season.

Meanwhile, Sindh has achieved more than 84.49 percent of its set targets and has sown 0.5678 million hectares against the set target of 0.672 million hectares while cotton production target for the province is set at 4.00 million bales

During the season, Khyber Pakhtunkhwa (KP) and Balochistan provinces saw a boost in cotton sowing as the two provinces achieved 113 percent and 132.24 percent of their planting targets, respectively.

The Economic Coordination Committee (ECC) of the Cabinet has fixed the intervention price of Cotton (Phutti) at Rs 8,500 per 40 kg to revive cotton production, stabilize the domestic market and ensure fair returns to farmers in the country.

Chairman Cotton Ginners Forum Ahsanul Haq said that no relief was given to the cotton ginning sector in the federal budget. Government has imposed 72% GST on cotton ginning factories at four different stages.

Ahsanul Haque also said that Sales tax of 18 % is levied on sale of cotton, cottonseed, cottonseed oil and oilcake with no relief. Due to heavy taxes, undocumented business trend is being seen in the ginning industry.

More than 50 percent of cotton ginning factories were non functional.

Due to the record increase in the production cost of textile mills and the record decrease in cotton prices due to the non-functionality of ginning factories, a big decrease in the per acre income of the farmer is being seen.

Apart from this, only fourteen crore and seventy lac rupees have been kept in the federal budget for better production of cotton.

Copyright Business Recorder, 2023

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