Dollar is on all time high but the prices of cotton shows down ward trend. Satisfactory increases in sowing of cotton. Rains will be beneficial for the crop. Waiting for government's cotton policy.
In the local cotton market during last week the bearish trend was seen in the market. Big textile groups had bought cotton from local and international markets according to their needs. Similarly other mills are buying cotton according to their needs. The ginners had left the stock of 4lac bales while it is expected that new cotton season will start from June. A ginner of Sanghar had done a deal of buying of 5 trollers of Banolla at the rate of Rs 1675 per maund on the condition of its delivery in June. The prices of cotton in Sindh and Punjab are Rs 7000 to 8900 per maund.
The Spot Rate committee of Karachi Cotton Association had decreased the rate by Rs 150 and closed it at Rs 8600 per maund. During the last week price of Dollar increased because of the speculations that increasing the price of dollar is a condition of IMF deal. It is expected that price of Dollar will reach Rs 160 to Rs 165 till the end of this fiscal year. On Friday the interbank rate of dollar reach at Rs 149 which is all time high while market sources are claiming that price of dollar will increase in coming days. Due to increase in the price of dollar the prices of all goods will be increased. The ginners had decreased the selling of cotton on the hope that prices of cotton will also increase because of increase of the price of dollar. While the textile and spinning mills owners are expecting that exports will increase but experts were of the view that importers don't give full benefit to the exporter and they demand discount.
On the other hand due to the increase in the price of dollar the prices of commodities are increasing especially due to increase in the prices of energy and increase in inter bank rate the cost of doing business has increased which resulted in a negative impact on exports. As a result of which exporters can not take full benefit of increase in the prices of dollar. Although the rate of dollar has an impact on the prices of cotton, cotton yarn and textile products due to which fluctuation was seen in their prices.
Moreover, trade war between China and America intensifies which is negativity effecting the world wide trade and crisis like situation arises in the world economy which has a negative impact on the cotton and textile products also.
Due to bearish trend in international cotton market the Rate of Promise (Waday Ka Bhao) of New York Cotton Market decreased and reached at 65 American Cent which is lowest in three years.
In the same way rates of cotton decreased in India although the initial estimate of cotton production in India is 3 crore 65 lac bales but it is expected that it will be 50 lac bales less and the production is expected to be 3 crore 15 lac bales. Despite of estimates of decrease in cotton production the prices of cotton are decreasing instead of increasing. The rates of cotton in China also decreased.
Chairman Karachi Cotton Brokers Forum told that according to the information received from the cotton production areas of lower Sindh the sowing of cotton is increasing and the position of crop is satisfactory. While sowing was effected in different areas of Punjab due to rains but there is a plenty of time for sowing and the rains will have positive impact on the crop. The government departments are also trying to increase the production of cotton. Up till now it is hoped that sowing area will be increased in the new season.
The government up till now has not announced the cotton policy while Prime Minister Imran Khan had announced his resolve of achieving production of 1 core 50 lac bales. At that time the department of Agriculture and Food Research has announced to fix the price of cotton seed at Rs 3500 per 40 kg and hinted of buying 5 lac bales through TCP. It is expected that sowing of cotton will be completed till the end of May and still the Cotton policy is not announced. The sowing can be extended till June in Punjab due to rains.
Moreover, Pakistan Cotton Ginners Association has released the statistics of the production of cotton till May 15 according to which 1 crore 7 lac and 78 thousand bales were produced in the country which is seven percent less as compared to last year.
The government has announced to give subsidy on fertilizer and seed in order to increase the production of cotton because it is considered as a back bone for the economy of the country.
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