Source: Business Recorder

RECORDER REPORT
Oct 23, 2020
KARACHI: Trading activity remained stable on the local cotton market on Thursday. According to the analysts a ‘non-event’ event has taken place this fiscal, yet no one has batted an eye. Pakistan, which for the last decade has restricted cotton import during July-December to protect domestic producers, has ‘forgotten’ to re-impose tariffs this year. So far, no farming lobby or cotton ginners association has registered serious protest.

There are two theories. The first suggests that Pakistan was slated to import over 5 million bales in FY20, one-third of which could not materialize due to disruption of global supply chain in the aftermath of Covid-19 and ensuing worldwide lockdown. By July, monthly imports had declined by 72 percent from their peak levels in February 2020.

Meanwhile, Pakistan Kissan Ittehad central chairman Chaudhry Muhammad Anwar accused the government of not framing a policy to ensure quality seed and adulteration-free pesticides to cotton growers.

Ch Anwar alleged that some influential people are conspiring to reduce under sowing area of cotton gradually to promote sugarcane crop that is highly water consuming crop. He said the Punjab government should take notice of the situation. The News has learnt that cotton crop mainly depends on good quality seed, adulteration free pesticides and agriculture department’s guidance in pest management to get a bumper crop.

But, here growers are facing critical financial losses in terms of crop decline due to unavailability of quality seeds and adulteration free pesticides. Major cotton growing districts in south Punjab are facing critical decline in production as more than 50pc crop has been damaged in the region.

Pakistan Cotton Ginners Association chairman Dr Jassumal demanded the government constitute a probe commission to investigate reasons behind cotton crop failure. Ch Anwar said the government policies caused cotton crop shortfall. He said textile goods are main exports of the country and if cotton is not available in the country then we would lose global markets.

Cotton Analyst Naseem Usman told that Government of Pakistan seems less interested in increasing cotton production as the Advisor for ministry of food security refused to import quality cotton seed and Advisor for commerce refused for support price in seminar held on 8th October 2020 .There is no effective mechanism to watch the production of seed. Presently he said most of the seed companies are purchasing banola either from ginners are growers which cannot be trusted.

Naseem also said that Pakistan Textile Exporters Association has appealed to the Prime Minister Pakistan for the immediate disbursement of all long outstanding refunds including sales tax, income tax and duty draw back. The association also appealed for the payment of textile policy initiatives (technology upgradation fund, mark up support & duty draw back of taxes).

They also called for the enhancement in the ceilings of Long Term Financing Facility (LTTF) and Temporary Export Reliance Facility (TERF) as huge investement is in pipeline. Moreover, ICE cotton futures climbed to a near 1-1/2 year peak on Wednesday, as the dollar faltered and demand improved for the natural fibre. The cotton contract for December settled up 0.02 cent at 71.04 cents per lb. Prices of the front-month contract earlier hit its highest since May 9, 2019 at 72.13 cents.

There was some profit taking after cotton touched the highs, “but dollar has been weak, demand has been off the charts and cotton is just on a mission higher,” said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago. Cotton prices had fallen below 50 cents in early April after the coronavirus pandemic hammered demand, but since then have risen over 40% as adverse weather stoked concerns of lower output.

“Everything corrected probably quicker than thought and countries are stockpiling after realizing prices are in favor now,” Marcus said, adding “to see this market move into the 80-90 cents range is not out of the question, especially if the USDA’s forecasts of the output do shrink.”

(Source: Business Recorder)