WEEKLY COTTON REVIEW: Rate soars to Rs 9,500 per maund
The rate of cotton reached Rs 9500 per maund which is highest during the current season. Senate Standing Committee proposes imposition of cotton emergency in the country keeping in mind the drastic decrease in the production of cotton. Committee directed that positive steps should be taken to increase the production of cotton. The textile sector faces financial crises due to increase in the cost of production.
In the local cotton market during the last week continuous buying was witnessed by textile and spinning sector and supply of Phutti was also increased due to which the trading volume increased. The rate of cotton, Phutti, Banola, Khal and eatable oil reach at Rs 9500 per maund which is highest during the current season. The rate of cotton in Sindh as per quality is in between Rs 7800 to Rs 9500 per maund. The rate of Phutti is in between Rs 3000 to Rs 4400 per 40 Kg. The rate of cotton in Punjab is in between Rs 8750 to Rs 9500 per maund while the rate of Phutti is in between Rs 3600 to Rs 4500 per 40 Kg. The rate of cotton in Balochistan is in between Rs 8700 to Rs 9400 per maund while the rate of Phutti is in between Rs 4200 to Rs 4700 per 40 Kg.
The Spot Rate Committee of Karachi Cotton Association has increased the rate of cotton by Rs 250 per maund and closed it at Rs 9200 per maund. Chairman Karachi Cotton Brokers Forum Naseem Usman told that this year it is difficult to achieve the target of 1 crore 50 lac (15,000,000) bales and due to untimely rains, extreme hot weather, unfavorable weather conditions, substandard seeds and low quality pesticides there will be a loss of 50 lac (5,000,000) bales worth Rs 200 billion. 45 to 50 lac bales will be imported of worth 1 crore 60 (16,000,000) lac dollars.
In this way country will suffer a loss of Rs 200 billion and foreign exchange of 1 and a half billion dollar will be spent on the import of cotton which will further deteriorate the economic condition. According to the government officials due to unfavorable weather conditions other than cotton crop the crops of rice, wheat and corn were also damaged.
Senate Standing Committee on National Food Security in its meetings held the other day told that one third of the cotton crop of the country was destroyed due to weather conditions which are very alarming. Cotton is not only the important cash crop of the country but the bread and butter of thousands of people is associated with it as well as the textile sector reliance is on this crop.
The government should take practical steps to increase the production of cotton. Proposals for increasing the cotton crop were presented in the meeting of the Senate Standing Committee on National Food Security. The repetition of details of those recommendations will be helpful. One third of the cotton crop was destroyed in the country due to the extreme hot wave in the country which came as result of climate change.
Senator Muzzaffar Hussain Shah presented these facts while presiding the meeting of the Senate Standing Committee on National Food Security. He also said that it is very important that we should produce seeds which are heat resistant as well as they will increase the production of cotton. He said that cotton emergency should be imposed in the country.
He said that only 1 crore bales will be produced against the target of production of 1 crore 50 lac bales set for the year 2019-20. The members of the committee showed their concerns on the decreasing production of the cotton crop. It was also demanded in the meeting that especial committee should be constituted which will probe the reasons of the low cotton production and the recommendations prepared in the light of their research should be implemented.
Committee also asked the Cotton Commissioner to prepare a comprehensive report on the production of cotton as well as the problems faced by the farmers. It was also decided that Ministry of National Food Security will announce minimum support price of the cotton and convince them to sow cotton in future.
Secretary National Food Security told the committee that matter of price of cotton will be presented before the concerned departments. He said that research grant should be given to Pakistan Agriculture Research Council and Pakistan Central Cotton Committee so that they will prepare new variety of seeds after research. Moreover, Naseem Usman told that mixed trend was witnessed in international cotton market. In the New York Cotton Market Rate Of Promise (Waday Ka Bhao) witnessed upward and downward trend according to the news regarding long standing America and China trade conflict.
During the last days due to the positive news the rate reached between 64 to 65 American cent and it started coming down because according to the weekly export report of USDA exports decreased by 32 percent due to which the rate was decreasing. According to the report Pakistan was the second largest importer of American cotton after signing export agreement of 44,000 bales. Bearish trend was witnessed in Chinese cotton market while it is expected that cotton production will increase in India because of sufficient rains.
Last year in India 3 crore 12 lac bales were produced where as this year target of cotton production in India is 3 crore 80 lac to 85 lac bales due to which the rate of cotton in India is decreasing. According to the experts the textile sector in India is in crisis especially business ties effected after the rising of tension between India and Pakistan during this year. Pakistan which is the biggest buyer of Indian cotton for many years will not import Indian cotton due to this the already low rate of cotton will further come down.
Moreover in the local yarn market there is an increasing trend and the price of cotton has reached at highest level. According to the experts prices of cotton will not increase further due to two reasons firstly government has imposed seventeen percent sales tax due which textile mills are in financial crunch. On the hand big textile groups had stocked the cotton till January and February.
Moreover they had also signed import agreements with foreign countries in large number and they will start opening Letter of Credit due to which there are chances that the rate of local cotton will come down. This year due to heavy cost ginners and textile mills will not be able to stock the cotton for long time. The economic conditions of the country are deteriorating day by day.
Business was affected due to the strikes in Faisalabad which is the biggest textile market of the country during many months. Few days back long strike was observed in the yarn market of Faisalabad due to the action of FBR. Power looms were on the strike for the last 12 days against the increasing power prices, imposition of taxes by FBR.