WEEKLY COTTON REVIEW: No business activity in market

The partial sowing of cotton has started but there are no estimates of production. The support price was not fixed yet. The crisis of the textile sector is increasing day by day. The industries have started working partially.
During the last week there was a complete lock down due to coronavirus as a result of which there was no business activity in the market however spot rates are necessary for banks and at international level due to which Karachi Cotton Association is issuing Spot rates regularly. The Association has stabled the rate at Rs 8800 per maund for the last two weeks.
In Punjab and Sindh the rate of cotton is in between Rs 7000 to Rs 8800 per maund. Majority of the textile mills and ginning factories were not operational. As per information government had given permission to the essential textile sector that they can start its operations especially mills having labor colonies can start their operations. The government wants that industries should start their working partially so that they can provide jobs to the laborers but the ginners were in distress because the burden of interest on bank loans was increasing. On the other hand they have to bear a double loss because of the low weight of cotton.
The Pakistan Cotton Ginners Association had not issued the fortnightly report of cotton production on April 3 due to lock down because of coronavirus. Up till now ginners had the stock of 5 lac bales but there was no buyer because mills were closed. On the other hand according to the information Punjab Agriculture minister had announced to start partial sowing of cotton in the province from April 1. The government was giving chance to the farmers that can start sowing despite of lock down due to the coronavirus.
Secretary Agriculture Punjab Wasif Khursheed had announced that cotton will be sown on 50 lac acres. He had directed the field formations that by adopting preventive measures should achieve fixed sowing target because cotton is the only crop which runs the wheel of the economy. The sowing of cotton will continue from April 1 to May 31. The pandemic of coronavirus can not subside the morale of field formations. The morale of all the stake holders is high to achieve the sowing and production target of cotton. The field formations are performing their duties of providing technical support to the farmers.
Our farmers playing a key role in improving the agricultural economy of the country deserves a tribute. He said we are proud of our field formations that are providing technical support to our farmers in difficult times of pandemic. We have full support of farmers in achieving the sowing and production target. The government is taking steps for making cotton crop a profitable crop. In this regard government of Punjab is utilising all its resources.
Partial sowing have started in the lower areas of Sindh. Prime Minister had constituted a special committee which will fix the support price of cotton. According to the experts support price should be announced before sowing so it will be easier for the farmers to take decision regarding sowing. The delay in fixing the support price will waste the opportunity to increase cotton cultivation. Moreover the germination capacity of the seed is also low that's why farmers will have to plant more seeds per acre. Agriculture Seed Federation had also certified seeds of low germination and announced to provide free seeds for farmers to cultivate land on 2 lac acres.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that mixed trend was witnessed in international cotton market. Fluctuation was seen in the rate of cotton in New York Cotton Market. Due to the impact of coronavirus and decrease in the prices of petrol the Rate of Promise (Waday Ka Bhao) of New York Cotton dropped at the lower level of 43.38 American cents. Moreover Saudi Arab and Russia had hinted of increasing the price of petrol after that rate of New York Cotton reached 51 cents with increasing 3 cents.
According to the weekly report of USDA the export of cotton witnessed a decrease of 47 percent. The situation in China is going towards normalization and trade activities are going to be started while the rate of cotton is stable. In India the rate of cotton is freeze so there is no fluctuation in the rate. Moreover the textile sector which is the biggest foreign exchange earner sector suffered badly due to the lock down. The foreign importers especially countries of European Union and America had stopped the shipments of textile sector due to which the inventory had increased and the quality of finished goods are deteriorating. Textile mills had appealed to the government that they should at least given permission to lift the finished product from factories to the port. Due to stocking they had to bear the interest rate. Due to the blockage of heavy amount mills had stopped their production. There is a problem for big mills that due to increase in the prices of dollar they are getting imported cotton on high price. On the other hand importers are canceling the orders and not ready to lift the finished product.
Some textile groups took the risk and signed the agreements abroad at the fixed rate of Rs 160 but the rate of dollar increased and reached at Rs 167 and now that are facing loss. Approximately 26 groups were involved in this business and now they were facing a loss of Rs 12 billion to Rs 15 billion.
This group had requested the government for compensation but Advisor on Commerce and Textile Abdul Razzak Dawood refused to give compensation to them after consultation with the high officials. He was of the view that these firms signed agreements in order to make money and it was their own decision and government had nothing to do with it. So government can not help them in this matter.
The mills had sought Prime Minister's advisor on finance Abdul Hafeez Sheikh's help for solving the issue. APTMA sources said that it was their own act and APTMA had nothing to do with it. In this way these mills had to bear the loss from three sides. Firstly bear the loss of Rs 12 billion to Rs 15 billion on the signed agreements, secondly foreign countries had cancelled their agreements and thirdly bear the loss of buying imported cotton on high price due to the increase in prices of dollar. Chairman APTMA Aman Ullah Kassim Machiyara told Naseem Usman that textile sector was in severe crisis.