Source: Business Recorder

RECORDER REPORT | Apr 08, 2021
KARACHI: The local cotton market remained sluggish on Wednesday with low volume of business and there was no change in the spot rate.

Cotton market analyst Naseem Usman said that spot rate remained at 11, 000 at the level of yesterday. Appreciation of greenback against Pak rupee strengthened the yarn markets and demand also improved. There was an expectation that decline in fiber may push the cotton market downward but dollar gathered strength again and improved the yarn markets too. He further said that China and New York markets opened in plus on April 06 while crude oil prices also seen bullish, which has created a certainty that it would support the yarn market too.

Farmers advisory committee (FAC) issued fortnightly guidelines for cotton farmers of Sindh and Punjab in its first meeting of the season on Tuesday observing that cotton sowing has surpassed last season’s sowing figures in lower Sindh and still in progress there while it has just begun in Punjab since Apr 1, 2021.

FAC experts advised farmers to get their soil analyzed by soil testing laboratory for balanced and need-based application of fertilizers to cut cost and get good production. Farmers should apply suitable pesticides on seed before sowing that will keep the crop safe against sucking pest attack particularly Thrips and Aphid for 35-40 days. FAC experts advised farmers to sow only registered varieties of seed. It is also learnt that the Federal Agriculture Committee (FAC) is meeting tomorrow (Thursday) in Islamabad to set the targets for the Khareef crops including cotton sowing in Punjab.

Value-added textile sector associations on Tuesday asked the government to place an immediate ban on the cotton yarn export to ease the commodity crisis. They also proposed a 10 percent duty on the cotton yarn export, saying he proposition if implemented will help stem falling trend in apparel textiles export. The associations also demanded of the government to permit a duty free import of cotton yarn from worldwide for at least next six months to arrest the commodity crisis that continues to hit the local market.

The proposals and demands were placed by the representatives of different apparel textiles associations to Adviser to Prime Minister on Commerce Razak Dawood during a meeting held on Tuesday virtually through internet. Globally, the prices of cotton have decreased but the commodity is still costlier in Pakistan.

Announcement of ECC proposal to allow import of cotton yarn from India had temporarily helped reduce the cotton yarn prices in the local market, but the cancellation of trade with the neighboring nation again spurred the commodity rates to the higher levels, they said. They demanded of the government to open an immediate forensic audit of local cotton yarn producers, similar on the pattern of sugar probe.

Meanwhile, ICE cotton futures gained over 3% on Tuesday, on mill fixations and expectations supplies will remain tight as forecasts pointed to dry weather in West Texas, the largest U.S cotton-producing region. Cotton contracts for May rose 2.04 cent, or 2.6%, to 79.92 cents per lb by 2:02 p.m. EDT (1802 GMT), having gained as much as 3.9% earlier in the session. Prices traded within a range of 77.7 and 80.88 cents a lb.

“We are seeing a little speculative buying return to the market... we probably saw some overnight export business and some mill fixations,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton, adding that a dry weather outlook in West Texas could have spurred some speculative buying. The US Department of Agriculture’s (USDA) weekly crop progress report on Monday showed the cotton crop was 6% planted in the week ended April 4, 1% below the same week a year-ago.

Cotton prices could rebound further in the near-term but the rebound will likely be capped by 5 cents as the fear over export cancellations will likely keep merchants from “aggressively” purchasing the natural fibre, said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.

Total futures market volume rose by 16,012 to 42,021 lots. Data showed total open interest gained 1,447 to 228,607 contracts in the previous session. (Source: Business Recorder)