KARACHI: The local cotton market remained bearish on Friday. Market sources told that mills were involved in cautious buying due to which the trading volume remained low.
Cotton Analyst Naseem Usman told that cotton stockpiling fell a massive 43 percent to 3.45 million bales till October 31, raising concerns that the country would have to import at least 7.0 million bales worth $3 billion to fulfil domestic demand, industry officials said.
Cotton arrivals declined 43.38 percent to 3.45 million bales against 6.09 million bales in the same month last year, as heavy monsoon along with sowing substandard seeds took a toll on total yields, said the last report released by Pakistan Cotton Ginners Association (PCGA).
Punjab and Sindh showed declines of 45 percent and 41 percent respectively in cotton production during the period under review. Both provinces had stocked 1.7 million bales each till the end of October. Last year, Punjab and Sindh stocked 3.16 million and 2.92 million bales, respectively.
Karachi Cotton Brokers Association Chairman Naseem Usman said that a decline of 2.6 million bales in cotton arrivals was a point of concern.
He also told that despite the fact that cotton is an important cash crop, which contributes significantly to the national economy by providing raw material to the local textile industry, as well as cotton lint for export, policy makers failed to introduce quality seeds in the country. Currently, 864,245 bales are in stocks with ginners, down 47 percent, compared to 1.62 million bales last year.
Meanwhile, cotton steadied on Thursday as concerns over deteriorating crop quality and bets for a smaller US crop in the next week's federal supply demand data countered pressure from positions rollover from the front-month contract.
The cotton contract for December was unchanged at 70.25 cents per lb by 1:07 p.m. EST (1807 GMT), after rising to its highest since Oct. 28 at 70.94 cents.
"We are picking up losses in the crop due to adverse weather over the past two weeks and are thinking that the WASDE report is going to show that there is a smaller US crop," said Louis Barbera, partner and analyst at VLM Commodities Ltd.
However, "we are in the process of selling December (contract) and buying March for all the longs and that is going to naturally keep a small lid on prices."
The US Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (WASDE) report is due on Nov. 10. Monday's weekly crop progress data showed that only 37% of the crop was in good/excellent condition, for the week ended November 1.
Naseem told that Federal Board of Revenue (FBR) has urged exporters to get maximum advantage of Duty and Tax Remission for Exports (DTRE) scheme. These include, DTRE, manufacturing bond, export-oriented unit schemes as well as temporary importation scheme under SRO 492(I)/2009 of March 29, 2009. However, these are extremely underutilized as the number of exporters making use of these schemes can be counted on fingers.
According to officials, despite being applicable to all sectors these export facilitation schemes are being largely used by textile sector. The exports of a country are dependent upon the performance of its SME exporters. Out of the prevalent export facilitation schemes, the DTRE is the most convenient for the SMEs. However, it has also not been able to achieve the desired level of popularity in the country.
Input Output Coefficient Organization (IOCO) North Zone Director General Sadia Munib has assured All Pakistan Textile Mills Association (APTMA) leadership of revising duty drawback rates on exports to make them realistic with the current incidence of duties and taxes.
"The existing duty drawback notification was issued about 11 years ago in 2009. Since then, the whole tariff rates have altogether changed and require immediate update," she said during a meeting with APTMA office bearers and members at here on Thursday. IOCO Additional Director Dr Mumtaz Ali, APTMA Punjab Chairman Abdul Rahim Nasir, Vice Chairman Kamran Arshad and Secretary General/Executive Director Raza Baqir were present in the meeting.
Naseem told that 1000 bales of Rohri were sold at Rs 9000 per maund, 2000 bales of Khanpur were sold at Rs 9000 to Rs 90200 per maund, 1400 bales of Khanpur were sold at Rs 9900 to Rs 10,000 per maund, 1400 bales of Haroonabad were sold at Rs 9750 to Rs 9950 per maund, 200 bales of Bagho- Bahar, 400 bales of Dharanwala were sold at Rs 9900 per maund, 1400 bales of Fort Abbas, 1200 bales of Rahim Yar Khan were sold at Rs 9750 to Rs 9900 per maund, 200 bales of Chistian, 200 bales of Lodhran, 200 bales of Yazman were sold at Rs 9850 per maund, 200 bales of Donga Bonga, 200 bales of Marrot, 600 bales of Mianwali were sold at Rs 9800 per maund and 800 bales ofv Faqeerwali were sold at Rs 9750 to Rs 9800 per maund.
He told that rate of cotton in Sindh was in between Rs 8500 to Rs 10,000 per maund. The rate of cotton in Punjab is in between Rs 9800 to Rs 10,200. He also told that Phutti of Sindh was sold in between Rs 3200 to Rs 4600 per 40 kg.
The rate of Phutti in Punjab is in between Rs 3500 to Rs 5000 per 40 Kg.
The rate of Banola in Sindh was in between Rs 1650 to Rs 1900 while the price of Banola in Punjab was in between Rs 1800 to Rs 2000. The rate of cotton in Balochistan is in between Rs 9200 to Rs 9400 while the rate of Phutti is in between Rs 3800 to Rs 5100.
The Spot Rate remained unchanged at Rs 9700 per maund. The Polyester Fiber was available at Rs 158 per Kg.
Copyright Business Recorder, 2020