KARACHI: The rate of cotton during previous week remained stable; however, the spot rate was increased by Rs 500 per maund. An increase of 30 lac bales in cotton production is expected with total expected production around 90 lac bales.
In the province of Punjab, cotton has been sown on only 3.5 million acres. However, Ministry of National Food Security and Research has yet to summon the meeting of Cotton Crop Assessment Committee.
The crisis in textile sector is deepening due to sharp increase in gas tariffs. There are no signs as yet of buying cotton through Trading Corporation of Pakistan (TCP).
As per details, the domestic cotton market was overall stable during the last week. Textiles and spinners are interested in buying quality cotton while cotton growers and ginners are selling it cautiously. Business volume also remained relatively low.
Pakistan Cotton Ginners Association has released the statistics of cotton production in the country till October 31; according to which the production of cotton in the country was sixty seven lac and ninety four thousand bales during this period, which was thirty lac and sixty one thousand more, around 82 percent more, as compared to last year’s production of thirty seven lac and thirty three thousand bales.
The market was not affected by the crisis of quality cotton and the reduction in the rate of Future Trading of New York Cotton, as the prices remained stable.
The government has tremendously increased the price of gas due to which commercial and industrial organisations and federations have decried that the cost of their production will increase, and in this situation it would be difficult to run the industry. The difficulties of the textile sector have also increased due to this sharp increase in gas tariffs. Textile sector has already been in crisis due to recession in the local and international markets.
Separately, a meeting was held on Friday in Islamabad by NFSR regarding the price of cotton, production and intervention price of cotton.
According to the sources, in the meeting, the inability to purchase cotton through TCP was pointed out. The issues of cotton production and price were discussed but no formal press release was issued.
Sources say that it would cause no harm if the meeting of Cotton Crop Assessment Committee was called and accurate cotton production was assessed. Surprisingly, the month of November has already started but the meeting of CCAC has yet to be convened. According to the sources, the people concerned may want to hide something.
The rate of cotton in Sindh as per quality is in between Rs 15,000 to Rs 18,000 per maund. The rare of Phutti is in between Rs 5,500 to Rs 7,200 per 49 kg.
The rate of cotton in Punjab is in between Rs 16,000 to Rs 18,000 per maund while the rate of Phutti is in between Rs 6,500 to Rs 7,800 per 40 kg. The rate of cotton in Balochistan is in between Rs 15,500 to Rs 16,000 per maund and the rate of Phutti is in between Rs 7,000 to Rs 8,700 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 5,00 per maund and closed it at Rs 17,500 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman has said that a bearish trend prevails in the rate of cotton in international market. The rate of Future Trading of New York Cotton remained 80 cents.
According to the USDA’s weekly export and sales report, four lac and fifty seven thousand and one hundred bales were sold for the year 2023-24. China was at the top by buying three lac and twenty thousand bales. Mexico was second by purchasing 18,200 bales. Peru bought 11,200 bales and was in third place.
Seed cotton (Phutti) equivalent to over 6.7 million or exactly 67,94,006 bales have reached ginning factories across the country till October 31, with increase in 81.99 percent as compared to previous year.
According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA) released on Friday, over 6.4 million or 64,08,087 bales have undergone the ginning process, i.e., converted into bales. Cotton arrivals in Punjab were recorded at over 2.9 million or 29,96,921 bales registering increase of 42.86 percent as compared to corresponding period of last year when arrivals were recorded 20,97,788 bales.
Sindh generated over 3.7 million or 37, 97,085 bales registering increase of 132.18 pc as compared to corresponding period of last year when arrivals were recorded 16,35,400 bales.
Textile sector bought 58,01,830 bales while exporters purchased 2,79,026 bales, but the Trading Corporation of Pakistan (TCP) didn’t buy during the cotton season 2023-24.
Sanghar district of Sindh topped with cotton arrival figure of 16,32,330 bales followed by Bahawalnagar district of Punjab with 6,88,760 bales. Total 594 ginning factories were operational in the country. Exactly 7,13,150 cotton bales ‘unsold stock’ was available in the ginning factories.
Naseem Usman, Chairman, Karachi Cotton Brokers Forum said that the total production of cotton in the country is expected to be around 90 lac bales. Last year, despite of the devastating floods thirteen lac bales were produced. This year it is expected that more than eighteen to twenty lac bales will be produced.
However, Zahid Mazhar, Chairman All Pakistan Textile Mills Association (APTMA) Southern Zone has strongly rejected the recent extraordinary increase in gas tariff for the export-oriented industries and feared it would be detrimental for the textile industry which is already suffering due to high cost of doing business.
Zahid Mazhar said the current increase in gas prices of export-oriented industries by an unprecedented 118 percent, i.e., from Rs1,100/ MMBTU to Rs2,400/MMBTU would lead to further decline in exports of Pakistan especially textile exports. He pointed out that the impact/ ratio of the recent gas price increase is much larger on the textile industry located in Sindh and Balochistan, as compared to Punjab.
However, Ehsanul Haq, chairman of the Cotton Ginners Forum, attributes the trend of good quality cotton to exporters this year due to low rainfall. However, they are upset with the federal government’s promise to ensure a minimum price of Rs 8,500 per 40 kg of cotton in the open market throughout the season.
Although the price of cotton has come down to Rs 7,000 per 40 kg, the federal government is yet to start procuring cotton from ginners through the Trading Corporation of Pakistan (TCP) as promised.
He blamed textile millers for the government’s inaction, alleging that representatives of major textile groups in both the federal and Punjab cabinets were influencing the decision to purchase cotton.
Haque further said that on the occasion of World Cotton Day on October 7, at a PCGA seminar in Multan, Punjab Agriculture Minister S M Tanveer had announced the good news that TCP would start buying cotton from ginners in a few days.
The statement was later linked to the subject to the approval of the Economic Coordination Committee, Haque lamented, adding that two meetings of the ECC have been held since then but without making the matter even part of the agenda. This is causing serious concern among farmers and may affect the cotton crop next year.
Moreover, extraordinary hike in gas prices for the textile export sector by 193 per cent will lead to a sharp rise in production costs, affecting textile exports and the price of cotton will further decrease in the local cotton market.
According to the sources, most of the cotton production takes place in the Punjab province, so sometimes the market is bullish or sometimes bearish. Ginners bought cotton at Rs 10,000 rupees per 40 kg cotton and the farmers sold the cotton at Rs 7,000 per 40 kg.
The instruction of the Punjab government is that we will buy Phutti from you at Rs 8,500 per 40 kg, which is the intervention price, but the cotton farmers are disappointed and will refrain from sowing cotton next season.
Copyright Business Recorder, 2023