NASEEM USMAN | Apr 19, 2021
KARACHI: The rate of cotton remained stable. Significant reduction in the trading volume observed. Bullish trend remained continued in international cotton market. The estimates of Federal Committee on Agriculture; regarding cotton production is not close to reality. Government’s decision regarding taking action against seed and pesticide mafia should be appreciated.
In the local cotton market during the last week textile and spinning mills showed less interest in buying while ginners had left the stock of only 70,000 bales. Ginners demanding high rates of good quality cotton whereas due to the decrease in the rate of dollar the price of yarn also comes down. Due to this the textile mills were involved in limited buying as a result of which the rate of cotton remained stable. The trading volume remained low.
The tussel is going on in between All Pakistan Textile Mills Association and Value Added sector for the availability of yarn on reasonable rates. Value Added sector was of the view that they were not getting yarn on reasonable rates while APTMA is repeating its logic that there was no shortage of yarn locally.
Value Added sector is continuously demanding from the government that 5% custom duty on the import of yarn should be abolished. Before that government had abolished 5% custom duty on the import of yarn in last year December. Now value added sector can freely import yarn from abroad without sales tax and without duty.
Economic Coordination Committee in its last meeting has given approval of the removal of 5 % customs duty on the import of yarn but it’s implementation can be possible if cabinet can approve it. APTMA has issued a press release in which they argued that yarn is prepared in good quantity in Pakistan which after exporting is left in good amount for the local mills and value added sector.
Before that Value Added sector has demanded from the government that like sugar mafia textile sector is not determining the exact price of yarn and was not selling yarn to local mills on reasonable rates. While refuting the claims of value added sector APTMA said that when value added sector exported it the rate of dollar was in between Rs 164 to Rs 165 which now after decreasing reached at the lowest level of Rs 152 to Rs 153 due to which the value added sector was facing a loss and that’s why they were blaming APTMA.
Textile Value Added sector when signed export agreements at that time the rate of dollar was high but now it decreased so they were facing loss. They were of the view they were unable to fix the dollar rupee parity and that’s why they were facing loss. They demanded that government should give compensation to them. But the government has categorically conveyed the message to the value-added sector that profit and loss is a part of business and government is not in a position to help them.
During the week in the local cotton market the trading was limited. The rate of cotton in Sindh is in between Rs 10200 to Rs 10700 per maund. The rate of cotton in Punjab is in between Rs 10800 to Rs 11500 per maund. There is a shortage of Phutti in both Punjab and Sindh so the rate of Phutti is not quoted here. The Spot Rate at Karachi Cotton Association was stabled at Rs 10800 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that bullish trend was witnessed in international cotton markets especially significant increase was witnessed in the Rate of Promise (Waday Ka Bhao) of New York Cotton. The Rate of Promise (Waday Ka Bhao) for May after increasing reached at the highest level of 85 American cents.
According to the weekly export report of USDA; exports decreased by 55 %. The reason behind that is that the rate of New York Cotton after decreasing reached 83.5 American cents. Overall bullish trend was witnessed in the New York Cotton Market. The reason behind bullish trend is that rate of dollar is decreasing.
On the other hand in American state of Texas there are chances of drought. Increasing trend was witnessed in the rate of cotton in the cotton producing areas of China, Brazil, and Central Asia. In India the rate of cotton is continuously increasing for the last two weeks.
Locally, sowing has started in the lower areas of Sindh and day by day sowing is increasing. Moreover, in Punjab harvesting of wheat is completed and after leveling of field sowing of cotton has started. Government has refused to give bail-out package to value added sector. The sector requested the government to provide bail-out package on the loss which they are bearing on export orders. According to the details government has refused to give bail- out package to value added sector.
Recently, high officials of ministry of commerce told representatives of value added sector met Advisor to Prime Minister on Commerce, textile and investment Abdul Razak Dawood and requested him to announce some financial compensation so that the value added sector can bear the loss which they face due to the wrong estimates of dollar rupee parity.
They were of the view that dollar will gain further against rupee that is the reason that they don’t booked it advance in rupees as they did it usually. The rate of dollar came down from Rs 165 to Rs 152. The government has clarified to value added sector that they don’t gave bail- out package on their commercial decision.
Officials also said that last year big brother of textile sector value added sector wrote a letter to the government for financial compensation. Officials were of the view that commercial organizations should bear the burden of commercial decision. In the meeting representatives of value added sector raised the issue of non availability of yarn. However, officials were of the view that government had abolished 5% import duty on yarn.
Officials also said that APTMA had already rejected both the demands of value added sector which includes provision of financial assistance and non availability of yarn. APTMA was of the view that increasing rates of cotton in different countries were the reason behind increasing rate of yarn.
For the last ten years the estimates of cotton production fixed by Federal Committee on Agriculture were not achieved. Despite this year’s cotton production which is limited to around 56 lac and fifty thousand bales of (160 Kg) the FCA has fix the target of production of One crore 5 lac bales of (170 Kg) which is impossible to achieve in this difficult situation. Textile mills were facing difficulties in evolving a strategy for the next year.
Chairman Cotton Ginners Forum Ahsanul Haq told that for the last eight years cotton production remained less than one crore bales and during the current year the cotton production was lowest in the history of the country.
However, like every year FCA has fix the target of production of one crore by ignoring the ground realities. Ahsanul Haq appealed to the Prime Minister of Pakistan that government should immediately announce cotton and textile policy so that in case of better expected income, the record increase in cotton cultivation the import bill of worth billions of dollars of cotton and eatable oil should be decreased.
They told that after the refusal of not allowing of import of cotton from India and non availability of cotton in Afghanistan and Russian states increasing trend was witnessed in the rate of cotton and cotton yarn while Pakistan has increased buying of cotton from America so that international orders of textile products can be completed on time.
They told that despite the trade war, China has started buying cotton from the US again instead of buying it from India. As a result of which there has seen a sharp rise in cotton prices in all international markets during the week. They also told that despite the recent rains in different cotton zones, the process of sowing is satisfactory. Federal Seed Certifications and Registration Department has cancelled the license of 204 seed companies. If somebody saw the seeds of these companies he should immediately contact agriculture department. The government has also initiated a campaign against substandard pesticides. (Source: Business Recorder)