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Home »Cotton and Textiles » Cotton Analysis » WEEKLY COTTON REVIEW: reduced output leads to raise in price
After the report of reduction in the production of cotton the prominent increase of Rs 400 per maund was witnessed in the price of cotton. Estimates of production of 11,000,000 (One crore ten lac bales) of cotton predicts reliance will be on imported cotton.

In the local cotton market during the last week the increasing trend in the prices of cotton remained continued due to the showing of interest of textile and spinning mills in the buying of good quality cotton and increase in the supply of Phutti. The prices of good quality cotton increase by Rs 400 to Rs 500 per maund; while the trading volume also increased.

The reason behind the increase in the prices of cotton as shown in the cotton production report is decrease of more than 6 lac bales which is 26.41 percent less as compared to last year these days.

Pakistan Cotton Ginners Association has released the production of cotton till September 15 according to which 1,852,000 (18 lac 52 thousand) bales were produced while during the last year during these days 2,517,000 (25 lac 17 thousand) bales were produced.

In Sindh the rate of cotton according to quality is in between Rs 7800 to 8700 per maund while the rate of Phutti is from Rs 3300 to Rs 3850 per 40 kg; while the rate of Banola also increased.

In Punjab the rate of cotton is from Rs 8450 to Rs 8800 while the rate of Phutti is in between Rs 3500 to Rs 4100 per 40 kg while the rate of Khal and Banola also increased. In Balochistan the rate of cotton is in between Rs 8450 to Rs 8700 per maund while the Phutti is available in between Rs 3800 to Rs 4300.

The Spot Rate Committee of Karachi Cotton Association has increased the rate of cotton by Rs 350 per maund and closed it at Rs 8550 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told that after the report which shows 26.41percent decrease in the production of cotton the textile and spinning sector started panic buying which increases the prices of cotton.

In the first three days of the trading week the spot rate increased by Rs 150 per maund per day due to which the spot rate increased by Rs 450 per maund, however on Friday after some decrease in price the spot rate decrease by Rs 100. Due to the increase in demand of Phutti by Ginners the rate of Phutti increased by Rs 200 to Rs 400 per 40 kg.

Naseem Usman told that mixed trend was seen in international market during this time. After the news of attack on oil reserves of Saudi Arab the probable increase in the prices of oil products the Rate of Promise (Waday ka Bhao) of New York Cotton decreased by two cent at once. On the other hand according to the weekly export report of USDA despite 14 percent increase in export as compared to last week bullish trend was not seen in New York cotton. The reason may behind this is that despite the news of softness coming between America and China trade conflict China cancelled the orders of import of 39000. Due to the crisis in Chinese textile sector there is very little fluctuation in the prices. While in India textile sector was also in crisis and many mills were partially closed.

Due to heavy financial crisis in Weaving Processing and Spinning sector there are chances that 5 to 7 lac people will loose their jobs. As a result of this the demand of cotton decreased as well as prices also decreased.

On the other hand the local textile sector is also in crisis. Loom owners of Faisalabad are on strike from September 20 against the registration by FBR. On the other hand the problem of payment of 10 percent sales tax on cotton has been solved and SRO has issued in this regard. Ginners will issue invoice to the buyer and submit the name, registration and complete details of the buyer in the tax return while ginners will pay fine as well as tax to the FBR if they will sold bales to unregistered buyers and for not giving information.

Moreover, due to the less production of cotton textile and spinning mills are planning to import cotton from abroad in order to fulfill their needs. Some mills had the facility of DTRE and they are taking advantage of this and are signing agreements of importing cotton which others are paying 5 percent to 10 percent sales tax on import due to which they are facing problems.

According to the information received from cotton growing areas germs attacked on cotton crop after the rain. Pink Boll worm is especially destroying the crop and difficulties were faced in their eradication. Moreover White fly and Mealy Bug virus was also destroying the crop. In this situation it is expected that one crore ten lac bales will be produced.

According to the results of the elections of the PCGA held last week to elect 15 members of the executive committee. Votes were cast by ginners in Karachi and Multan. The Ginners Pannel clean sweep the elections.

Copyright Business Recorder, 2019

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