Cotton prices remained steady. A significant drop in trading volume has been observed. The bullish trend in the international cotton market has persisted.
The forecasts of the Federal Committee on Agriculture for cotton production are far from accurate. The government’s decision on how to deal with the seed and pesticide mafia should be carefully considered.
Textile and spinning mills showed less interest in buying cotton in the local market last week, although ginners had left a reserve of just 70,000 bales. Ginners are seeking high prices for high-quality cotton, while the price of yarn is falling due to the weakening of the dollar.
As a result of this, textile mills engaged in small purchasing, resulting in a steady cost of cotton. The amount of trades remained poor.
The All Pakistan Textile Mills Association and the Value Added Industry are at odds over the supply of yarn at fair prices.
The value-added sector complained that they couldn’t get yarn at reasonable prices, while APTMA argued that there was no shortage of yarn in the region.
The value-added sector has consistently demanded that the government eliminate the 5% customs duty on yarn imports. Previously, in December of last year, the government scrapped a 5% customs duty on yarn imports.
Now the value-added sector will import yarn from other countries tax-free and duty-free. The Economic Coordination Committee approved the abolition of a 5% customs duty on yarn imports at its most recent meeting, but it will only be implemented if the cabinet approves it.
In a press release, the APTMA argued that yarn is produced in large quantities in Pakistan, with enough left over for local mills and the value-added sector after export.
Previously, the value-added sector had complained to the government that, like the sugar mafia, the textile industry was unable to determine the exact price of yarn and was not selling yarn to local mills at fair prices. Although refuting the arguments of the value added sector, APTMA said that when the value added sector exported, the dollar rate was between Rs 164 and Rs 165, which has now dropped to Rs 152 to Rs 153, resulting in a loss for the value added sector, which is why they are 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 the government should give compensation to them.
However, the government has made it clear to the value-added industry that profit and loss are a part of business and that the government is not in a position to assist them.
Trading in the local cotton market was light during the week.
Cotton prices in Sindh range from Rs 10200 to Rs 10700 per maund. Cotton prices in Punjab range from Rs 10800 to Rs 11500 per maund.
Since Phutti is in short supply in both Punjab and Sindh, the rate of Phutti is not provided.
The Karachi Cotton Association’s Spot Rate Committee has set the cotton rate at Rs 10800 per maund.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that there was a bullish trend in international cotton markets, with a substantial increase in the Rate of Promise (Waday Ka Bhao) of New York Cotton. After increasing, the Rate of Promise (Waday Ka Bhao) for May reached its highest level of 85 American cents.
Exports fell by 55 percent, according to the USDA’s weekly export survey. The explanation for this is that the cost of New York Cotton has dropped to 83.5 American cents after a period of decline. In the New York Cotton Market, there was an overall bullish theme. The decrease in the value of the dollar is the explanation for the bullish pattern. On the other hand, drought is a possibility in the American state of Texas.
In the cotton-producing areas of China, Brazil, and Central Asia, there has been an upward trend in the rate of cotton. Cotton prices have been steadily rising in India for the past two weeks.
Sowing has begun in Sindh’s lower areas, and the rate of sowing is rising day by day. Furthermore, in Punjab, wheat harvesting is complete, and cotton sowing has begun after field levelling.
The government has declined to offer the value-added sector a bailout package. The industry has asked the government for a bailout package to cover the losses they are incurring on export orders. The government, according to the data, has declined to provide a bailout package to the value-added sector.
Representatives from the value-added sector recently met with Advisor to the Prime Minister on Trade, Textiles, and Investment Abdul Razak Dawood, requesting that he announce some financial compensation so that the value-added sector can bear the loss caused by incorrect dollar-to-rupee parity estimates.
They were of the opinion that the dollar would appreciate more against the rupee, which is why they did not book it in rupees as they normally did. The dollar rate has dropped from Rs 165 to Rs 152. The government has made it clear to the value-added sector that it would not have a bailout package based on commercial decisions.
Officials also stated that the textile sector’s big brother, the value added sector, wrote a letter to the government last year requesting financial compensation. Officials believed that the burden of commercial decision-making could fall on commercial organisations. Representatives from the value-added sector raised the question of yarn scarcity during the meeting.
Officials, on the other hand, believed that the government had scrapped the 5% import duty on yarn.
Officials also mentioned that APTMA had already dismissed both the value-added sector’s demands for financial assistance as well as the non-availability of yarn.
APTMA was of the opinion that rising cotton prices in various countries were the cause of rising yarn prices.
Cotton output estimates set by the Federal Committee on Agriculture have not been met for the past ten years. Despite the fact that this year’s cotton production is limited to around 56 lac and fifty thousand (160 Kg) bales, the FCA has set a goal of one crore five lac (170 Kg) bales, which is impossible to achieve in this difficult situation. Textile mills were having trouble coming up with a plan for the coming year.
Cotton production has been less than one crore bales for the last eight years, according to Chairman Cotton Ginners Forum Ahsanul Haq, and cotton production this year was the lowest in the country’s history. However, the FCA has set a production goal of one crore, as it does every year, while ignoring the ground realities.
Ahsanul Haq urged Pakistan’s Prime Minister to announce a cotton and textile policy as soon as possible, so that in the event of higher projected income and a record rise in cotton cultivation, the import bill for cotton and edible oil, which is worth billions of dollars, can be reduced.
They said that as a result of the refusal to allow the import of cotton from India and the lack of cotton in Afghanistan and Russia, the price of cotton and cotton yarn has risen, while Pakistan has increased its purchases of cotton from the United States in order to meet foreign textile orders on time.
They said that, amid the trade war, China has resumed purchasing cotton from the United States rather than India. Cotton prices have risen dramatically in all foreign markets this week as a result of this. They also said that, despite recent rains in various cotton zones, the sowing process is going well.
204 seed companies’ licences have been revoked by the Federal Seed Certifications and Registration Department. If someone sees these companies’ seeds, they can contact the agriculture department right away. A campaign against substandard pesticides has also been launched by the government.