KARACHI: Stability in the rate of cotton was seen previous week. However, there was a difference of Rs 2,000 per maund in the rate of cotton depending on the quality.
All Pakistan Textile Mills Association has requested for clarification on supply and price of RLNG gas.
Separately, Secretary Agriculture Punjab Iftikhar Soho has directed the Extension Wing that instead of relying on ginners for cotton data, they should keep their own record of arrival of cotton.
In the local cotton market, the price of cotton remained stable after a bearish trend in the last week.
The price of cotton is fixed according to the quality. A difference of about Rs 2,000 per maund was seen between good and low quality cotton.
The price of quality cotton was Rs 18,500 per maund, while the price of low quality cotton was Rs 16,000 to Rs 16,500 per maund. In the same way the rate of Phutti was in between Rs 6,000 to Rs 6,000 to Rs 8,500 per 40 kg.
Although the business volume remained relatively low, many mills are making careful purchases of cotton as per their requirement.
However, rains and attack of whiteflies and other pests have damaged the crop, affecting the yield and quality of cotton.
The government had set a cotton production target of 1 Crore 27 Lakh 70 thousand bales. The relevant government agencies tried their best to increase the crop yield, but the month of September, which is considered to be a bad month for the cotton crop, had a negative effect on the cotton crop. The cotton crop is attacked by Whiteflies, milli-bugs, etc. This cycle of pest attack has been going on for many years but the concerned authorities seem to be neglecting this issue. It is said that the crop is affected every year due to the abnormal increase in climatic conditions, and a strategy should be developed to solve this issue.
The cotton crop target is expected to drop by 37% to around 90 lac bales from the current one Crore 27 lac and seventy thousand bales.
On the other hand, due to the recession in the local and international markets, the export of textile products is also continuously decreasing.
Moreover, due to decline in the rate of dollar, continuous increase in energy prices, abnormally high interest rate, a severe financial crisis is hitting the textile sector hard.
The rate of cotton in Sindh as per quality was in between Rs 16,500 to Rs 18,500 per maund. The rate of Phutti was in between Rs 6,000 to Rs 8,200 per 40 kg.
The rate of cotton in Punjab was in between Rs 17,500 to Rs 18,500 per maund while the rate of Phutti was in between Rs 7,000 to Rs 8,800 per 40 kg. The rate of cotton in Balochistan was in between Rs 16,800 to Rs 17,200 per maund and the rate of Phutti between Rs 7,800 to Rs 8,200 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 2,00 per maund and closed it at Rs 18,000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman has said that overall a mixed trend was observed in international cotton market. The rate of Future Trading of cotton is 87.50 American cents per pound.
According to the USDA’s weekly export and sales report for the year 2024-23, 55,300 bales were sold. Vietnam took the top spot by buying 15,700 bales. China bought 13,100 bales and came second. Indonesia bought 5,400 bales and ranked third. 11,000 bales were sold for the year 2024-25. Malaysia was at the top by purchasing 8,800 bales. Thailand bought 2,200 bales and came second.
Separately, while expressing concerns about the continuation of cross-subsidy, the All Pakistan Textile Mills Association (APTMA) has sought time from caretaker ministers for finance and energy to discuss the RLNG/ gas supply and pricing, especially for the winter months.
In letters to both caretaker ministers, APTMA Executive Director Shahid Sattar has stated that recent media reports have suggested that the government has decided that cross-subsidies to unproductive sectors of the economy will continue to be included in power tariffs for the export sector. “We express our deep concern about this, as it is contrary to our shared goal of achieving a robust economic recovery,” he added.
According to the APTMA, countries compete for export orders on the basis of cost and value for money, and export sectors around the world are not subject to various kinds of taxes and duties, adding that cross-subsidies and stranded costs as such are taxes and including them in power tariffs for exporters renders exports uncompetitive, causing a deterioration of key economic indicators, balance of payments, and an increase in unemployment.
The APTMA has also shared details of the economic implications of high power tariffs for exporters and possible solutions. “Over 50 percent of the industry’s energy needs are currently met through RLNG/ gas. Given the high-power tariffs and uncertainty surrounding availability and pricing of RLNG/ gas, this is making it difficult for exporters to book orders,” Shahid Sattar maintained.
He further stated that the industry requires clarity on RLNG/ gas supply and pricing, especially for the coming winter months as this coincides with a surge in demand for clothing in Western markets.
To plead the case for exports, a delegation of industrialists from leading business houses from across the country and the textile value chain, intends to meet both ministers on October 5, 2023.
However, amid reports that ginners are resorting to under-reporting the arrival of raw cotton to save taxes as well as underpay the growers, the Punjab agriculture authorities have decided to record the crop production on their own and field the Trading Corporation of Pakistan (TCP) as a player in the cotton market. So far, cotton arrival in the ginning factories in the province has been 100 per cent more than the figures from last year.
According to the Punjab Crop Reporting Service, cotton production in the province was approximately more than 2.2 million bales by mid-September this year.
However, in the wake of reports of under-documentation/ under-reporting by the ginning factories, Agriculture Secretary Iftikhar Sahoo has directed the extension wing to maintain a record of cotton arrivals on their own instead of relying on the ginners for the statistics.
Some cotton growers alleged that the ginners paid them less than Rs8,500 per 40, which is the minimum support price promised by the Punjab government at the onset of the cotton sowing season.
Prices remained stable after the arrival of cotton in the market, and farmers initially received rates between Rs8,500 to Rs9,200. However, with the fall of the dollar value against the rupee, cotton rates were re-adjusted to between Rs7,800 to Rs8,000. A spokesperson for the Punjab Agriculture Department says that considering the cotton market trends, it has been decided that the TCP should be brought on board immediately to ensure the payment of the minimum support price to the farming community.
The spokesperson says that all officers and staff of the department are working tirelessly to achieve the cotton production target this year.
Counting the steps the department took for the revival of cotton in the province, he said that approved varieties of cotton seeds were provided to the growers at subsidised rates, and a subsidy worth billions of rupees had been provided on Potash and Phosphorus fertilisers.
Copyright Business Recorder, 2023
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