KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Wednesday has increased the spot rate by Rs 300 per maund and closed it at RS 12200 per maund.
The local cotton market remained Bullish on Wednesday. Market sources said that trading volume was low because the rate was high. Sources also told that stock of one lac ninety thousand bales were left which is a peanut for local textile industry.
5.637 million or exactly 5,637,749 bales reached ginning factories across the country till March 1, registering 34.18 per cent shortfall as compared to corresponding period of 2020 when arrivals comprised over 8.5 million bales.
ICE cotton futures fell about 1% on Tuesday following a sharp rise in the previous session, as a subdued sentiment in equity markets weighed on the natural fibre.
Cotton contracts for May fell 0.91 cent, or 1%, to 90.66 cents per lb, by 1:32 pm ET (1832 GMT). It traded within a range of 90.13 and 91.45 cents a lb.
The fibre gained as much as 4.5% in the previous session but has retreated from the over two and a half year highs recorded last week.
“The stock market is lower; that’s weighing on sentiment a bit. Also, cotton might be getting little overpriced,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
“However, demand for cotton has been pretty strong,” he added. Wall Street’s major stock averages dipped after a strong start to the month as U.S benchmark treasury bonds remained elevated.
Cotton Analyst Naseem Usman told that value-added textile sector has urged the government to accord genuine priority to the sector and immediately allow duty-free import of cotton yarn through presidential ordinance or act of Parliament failing which the government shall be responsible for the unrest in exporters which will lead to countrywide protest.
The value-added textile sector is continuously drawing the attention of the government through appeals towards unavailability and shortage of cotton yarn – which is basic raw material since last five months but to no avail.
This was articulated at a joint press conference by chairman Council of All Pakistan Textile Associations Muhammad Zubair Motiwala, Pakistan Apparel Forum chairman Muhammad Jawed Bilwani, Pakistan Hosiery Manufacturers & Exporters Association central chairman Riaz Ahmed, Towel Manufacturers’ Association of Pakistan vice chairman Aamir Lari, former chairman of Pak Readymade Garments Manufacturers & Exporters Association Sh Shafiq, former chairman of Pakistan Knitwear & Sweaters Exporters Association Kamran Chandna, Pakistan Cloth Merchants’ Association chairman Abdus Samad Shekhani, Pakistan Bedwear Exporters Association chairman Rehmat Naveed Elahi, Pakistan Hosiery Manufacturers & Exporters Association chairman Tariq Munir, Pakistan Bedwear Exporters Association vice chairman Danish Javed, SITE Association of Industry president Abdul Hadi.
Inconsiderate response tantamount to government’s lack of priority and non-seriousness to enhance value-added textile exports which contribute to around 62 percent in total exports, provide 42 percent urban employment particularly to female workforce, earn highest foreign exchange and supports approx 40 allied industries. Decreasing 4.5 percent in exports endorses the view point of exporters that unavailability of cotton yarn will shatter the export orders in hand which will eventually be diverted to other competing countries if the cotton yarn is not made available in required quantity. The government is cautioned about the dire consequences and appealed to allow duty free import of cotton yarn and place ban on export of cotton yarn in order to save the exports, industries and employment.
Prime Minister’s Adviser on Commerce and Investment, Abdul Razak Dawood has said that the main reason for increase in import bill is import of sugar and wheat.
“Import bill this year also increased because we had to import wheat and sugar to stabilise the market prices,” he said in a tweet. He added that cotton was also imported to help the export-orientated industry so that exports are not hampered.
Naseem Usman told that Pakistan may allow cotton import from India through land route as prospects of gradual restoration of bilateral trade ties have brightened after the new ceasefire agreement along the Line of Control (LoC).
According to a local media report that cited sources in the Ministry of Commerce, Adviser to the Prime Minister on Commerce Abdul Razak Dawood may take a decision on whether to import cotton and yarn from India next week.
The report claimed that the issue of cotton shortfall had been brought to the notice of Prime Minister (PM) Imran Khan whereas a formal summary will be presented before the Economic Coordination Committee (ECC) of the federal cabinet after a principled decision is taken in this regard. “In-house deliberations have already begun but the final decision would be taken only after seeking the premier’s approval.”
The arrival of seed-cotton into ginneries plunged 35pc to 5.57 million bales as of January 31, 2021, the lowest level witnessed in Pakistan’s history in the last two decades.
Given the situation, this year’s cotton imports may touch the highest levels seen in the country’s recent past, putting an extra burden on current account position. Cotton production was recorded at 8.487 million bales in the same period of last year.
Of the total production, textile mills bought 5.046 million bales while 70,200 bales were picked up by exporters. Currently, only 90 ginning mills are functioning in the country.
Cotton outputs in the country have plunged historic lows mainly due to poor seeds and lack of technology and innovations, threatening the livelihoods of growers and textile sector’s viability.
Pakistan had severed trade ties with India after New Delhi unilaterally annexed Jammu and Kashmir by ending its special status granted under Article 370 of Indian constitution. The trade ties between both the countries can help minimise cost of production and ensure sustained food supplies.
Just two weeks ago, Adviser to the Prime Minister on Commerce Abdul Razak Dawood had ruled out the possibility of importing cotton from India to bridge the yawning domestic shortfall. But a breakthrough over 2003 ceasefire agreement on the Line of Control between Pakistan and India has provided an opportunity to the commerce ministry to revisit the decision.
Sources in the Ministry of Commerce told that the adviser may take a decision on whether to import cotton and yarn from India next week. They said that the issue of cotton shortfall has already been brought to the notice of Prime Minister Imran Khan. Once a principled decision is taken, a formal summary will be presented before the Economic Coordination Committee of the cabinet, they added
The sources said that in-house deliberations have already begun but the final decision would be taken only after seeking the approval of Prime Minister Imran, who also holds the portfolio of the commerce minister
“I cannot say yes or no at this stage and would be in a better position to respond on Monday,” said Dawood while responding to a question on whether Pakistan was considering allowing cotton import from India.
Naseem told that 200 bales of Bahwal Pur were sold at Rs 13000 (Cond) and 400 bales of Bahawal Nagar were sold at Rs 12500 per maund.
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4500 to Rs 6300 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 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 300 per maund and closed it at RS 12200 per maund. The Polyester Fiber was available at Rs 215 per Kg.