KCA raises cotton spot rate by Rs100 to Rs10700

19 Jan, 2021

KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Monday has increased the spot rate by Rs 100 per maund and closed it at Rs 10,700 per maund.

The local cotton market remained bullish on Monday. Market sources told that trading volume was satisfactory.

Naseem Usman told that cotton production decline by 34.15% according to the report released by Pakistan Cotton Ginners Association on January 15.

Benefits of higher textile exports have been eaten up by poor cotton growth as the textile sector had to import lint and other related accessories (excluding textile machinery) up to $1.5 billion in the first five months of the current fiscal year.

Textile exports increased by 7.8 percent in the first six months of the current fiscal year to reach at $7.442bn. In dollar terms, the increase was of $538 million. However, the textile sector had to spend $321m to import raw cotton in the first five months of the same fiscal year.

Cotton and textile experts predict that the import of cotton could cross $1bn by the end of the third quarter of FY21. Imports of textile group included raw cotton, synthetic fibre, synthetic and artificial silk yarn, worn clothing and other textile items costing a total $1.545bn. The import of textile group has increased by 50pc during the five months of this fiscal.

In its recently issued first quarterly report for FY21, the State Bank said prospects of higher cotton production were slim from the outset, given that the area dedicated to the crop — recorded at 2.2 million hectares — is the lowest since FY82. Specifically, the area under cotton in FY82 was 2,214.1 thousand hectares, marginally lower than the 2,217.9 thousand hectares registered in FY21.

The area under cotton has witnessed a spectacular decline in the past decade: it averaged 2.7m hectares during FY12 to FY21, compared to nearly 3m hectares between FY92 to FY11.

“The crop has lost its competitiveness relative to other major crops, in particular sugarcane,” said a State Bank report.

Being a tradable commodity, there is higher competition in the cotton market which effectively puts a ceiling on its price growth. Meanwhile, sugarcane is generally non-tradable and the market structure does not allow it to be traded across borders. Moreover, the minimum support price for sugarcane also gives comfort to growers.

“The pricing dynamics have tended to give sugarcane an edge over cotton, which has manifested in the switching of area away from the cotton in favor of sugarcane,” the report said.

In the second half of 2020, heavy rains badly damaged cotton crop. The SBP said that as a result, the provisional cotton yield was estimated to be 47.3pc short of the FY21 target in Sindh, and 9.4pc shy of the annual target for Punjab.

Cotton and textile industry reported that seed germination will be a major problem to maintain plant population as field tests show the range of 40-60pc germination against the normal requirement of more than 80pc. Under the current situation, farmers must use double the seed to maintain plant population. Cotton production fell for the third consecutive year as area under production declined while yields failed to reach targeted levels.

Naseem Usman told that 200 bales of Saleh Pat were sold at Rs 9,800 per maund, 1000 bales of Ghotki were sold at Rs 10,600 per maund, 600 bales of Rahim Yar Khan, 1000 bales of Khan Pur, 2000 bales of Sadiqabad, 400 bales of Bagho Bahar, 200 bales of Marrot were sold at Rs 11,000 per maund, 400 bales of Fort Abbas were sold at Rs 10,700 to Rs 10,950 per maund, 600 bales of Yazman Mandi, 400 bales of Mian Wali, 400 bales of Shuja Abbad, 400 bales of Haroonabad were sold at Rs 10,500 per maund.

Naseem also told that rate of cotton in Sindh was in between Rs 10,000 to Rs 10,700 per maund. The rate of cotton in Punjab is in between Rs 10,200 to Rs 11000 per maund. He also told that Phutti of Sindh was sold in between Rs 3800 to Rs 5000 per 40 kg. The rate of Phutti in Punjab is in between Rs 4000 to Rs 5500 per 40 Kg.

The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 10,000 per maund.

The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 100 per maund and closed it at Rs 10,700 per maund. The price of Polyester Fiber was increased by Rs 3 Kg and was available at Rs 191 per Kg.

Copyright Business Recorder, 2021

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