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The sowing of cotton is successfully going on. Cotton production is expected to increase. The new crop of cotton is expected to start arriving partially from the month of June in Sindh. Export sector is demanding restoration of zero rated status.

No trading activity was reported in the local cotton market during the last one and a half months because of the lock down due to the coronavirus.

The Spot Rate Committee of Karachi Cotton Association has closed the spot rate without any change at Rs 8800 per maund because of the continuous lock down for the last one and a half months. The rate of cotton in Sindh and Punjab is in between Rs 7000 to Rs 8800 per maund.

Textile and spinning mills are busy in receiving deliveries of imported cotton from abroad while ginners were looking for buyers as there was no business in the market. Small mills had the stock of good quality expensive cotton but the mills were closed for months. The financial crisis is increasing day by day. The government had given the permission to mills of export oriented sector to start their operations but they already had the stock of cotton as well as they were receiving deliveries of imported cotton from abroad so they were not buying cotton from ginners.

Ginners were facing loss from both sides; on one side the rate of interest of banks were increasing and on the other hand due the increasing dryness the cotton is loosing its worth.

Ginners were in panic like situation as they had the stock of 5 lac bales. It is expected that there will be three and a half to four lac bales will be in the stock which will be sold at low price as an old crop at the start of the season. The pace of business activities was slow in Ramazan due to which selling of cotton becomes more difficult.

In Sindh the cotton sowing is in full swing while the partial sowing has started in Punjab. Cotton trader belonging to Sindh's tehsil Dagri said that farmers were taking interest in sowing in lower Sindh due to the ample availability of water however in some areas farmers were giving preference in sowing to the crops of Peeper, Sugar cane and rice because they are hopeful that they will get good price of these crops.

He also said that cotton growers were complaining about the low quality of seeds. Due to the low quality of seeds they had to sow crop again. They said that government had no clear cut policy on the quality of seeds.

Chairman Ginners Forum Ehsanul Haq told that this year in Punjab due to the availability of water area of cotton cultivation increased as compared to last year. Government has set the target of cultivation of cotton on 50 lac acres in Punjab. It is expected that cotton production will increase if the weather conditions remains favorable. However agriculture minister Punjab Malik Noman Ahmad Langrial in its statement had asked the farmers to use extra amount of seeds per acre because of the low germination value of seeds.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that bullish trend was witnessed in international cotton market. The rate in New York Cotton Market started increasing after the news regarding China will start buying. After the increase of four cents per pound the Rate of Promise (Waday Ka Bhao) of New York cotton reached at 57 American cents but closed at 54.36 American cents after the weekly export report of USDA which shows that exports decreased by 15 percent as compared to last week. The increase in cotton prices was witnessed after the normalization of business activities in China.

In India the rate of cotton increased by Rs 300 to Rs 400 per Candy. President Cotton Association of India Atul Ganatra in a statement said that consumption of cotton in India may fall by 25-30 lac bales in the current year following the coronavirus out break and the subsequent nationwide lock down. He said that as a result of low consumption Opening Stock will be piled up in the coming year. The price of cotton decreased by 10 percent as ginners had sufficient stock and they were looking for buyers while ginners were in panic as there was no business.

Secretary General South Indian Mills Association told that normally the consumption of cotton is in between 25 to 27 lac bales per month but demand is zero because mills were closed due to lock down.

Atul Ganatra in a letter written to the Prime Ministers' Office (PMO) and the ministries of Textiles, and Agriculture and Farmers' Welfare seeking assistance and support for the cotton ginning and pressing factories.

On the other hand in a letter written by chairman All Pakistan Textile Mills Association (APTMA) Amanullah Kassim Macchyara to the adviser to the PM on Commerce, Textile and Investment Abdul Razak Dawood, urging him to retrieve the withdrawal of zero rating regimes in a bid to wriggle the export industry from economic morass. The textile industry said the post COVID-19 situation would change the industry drastically, as export orders had already been cancelled, payments due against LCs delayed, and no new orders offered. It is difficult that situation will be normalized after one year.

Moreover, Pakistan Yarn Manufacturing Association while representing the demands of spinning, looms, sizing, gray cloth, dinning, printing and hosiery sector in a meeting with Commissioner said that government should give permission to whole supply chain to start their operations after implementing the Standard Operating Procedures announced by the government. The Commissioner while giving the positive response on the demand of the industry said that he will request both the federal and provincial government that will allow the operation of the whole supply chain.

Governor State Bank of Pakistan Reza Baqir said that bank has reduced the interest rate by one percent and industry can take loan on three percent for paying the salaries of their employees.

Copyright Business Recorder, 2020

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