KARACHI: The local cotton market remained stable on Wednesday. Market sources told that trading volume was satisfactory.
Cotton prices climbed to a 2-1/2-year peak on Tuesday, as robust demand and expectations of a reduction in production supported the natural fibre. The cotton contract for March settled up 0.85 cent, or about 1%, at 88.12 cents per lb, at 2:39 p.m. EST, having touched its highest since August 2018 at 88.90 cents earlier.
“The sentiment is bullish,” said Jack Scoville, vice president at Chicago-based Price Futures Group, adding that export demand has been very strong and there are increased expectations for a decrease in production.
In its weekly export sales report last Thursday the US Department of Agriculture showed that exports of 433,600 running bales (RB)- a marketing-year high – were up 36% from the previous week, of which 143,200 RB were shipped to China.
The agency had left its US cotton production estimate for 2020/2021 at 14.95 million bales in its monthly World Agriculture Supply and Demand Estimates.
Moreover, Former chairman and spokesman of Federal B Area Association of Trade and Industry (FBAATI) Idrees Gigi said textile exporters were not able to work at their full potential due to shortage of cotton yarn. Cotton production remained less than 15 million bales.
Limited to 5.5 million bales, the price of cotton is skyrocketing due to shortage in the country and exporters are currently facing uncertainty, cotton to the textile sector due to easy availability of raw materials. Export of yarn should be banned completely and duty free import of yarn should be allowed.
A huge number of export orders are being received by the value-added garment industry, however, exporters are not accepting these orders for the calendar year 2021 due to skyrocketing price of fabrics in the country along with short availability, especially of the denim fabric.
According to the press statement issued by the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Vice Chairman Adeeb Iqbal, government should abolish all duties on the import of fabrics in line with the import relaxation provided on import of cotton yarn, as value-added garment sector is facing severe shortage of basic raw material of fabrics, which may lead to a drastic decline in value-added textile export.
“We want duty-free import of fabric along with yarn, as the cotton prices find no respite from an unabated spike with the industrial input trading at season’s highest rates because its muted local production continues to widen demand and supply gap,” he added.
Cotton Analyst Naseem Usman told that the fertilizer companies have increased prices of DAP by Rs 300 per bag. Earlier, Fauji Fertilizer Bin Qasim Limited (FFBL) had increased its DAP prices by Rs550 per bag. The company has increased its prices due to increased demand globally and the reduction in supply from China. Now, DAP prices are again up due to increased demand globally. After the increase, FFBL primary DAP margins had increased to a record high of USD230/ton, which was last seen in 2015 as phosphoric acid remained stable at USD689/ton.
Naseem Usman also told that Pakistan has said that it has no plans to allow duty-free import of cotton from India to bridge the shortfall.
The country is currently facing a shortfall of one million bales due to low production this year.
Talking to journalists adviser to Prime Minister on Commerce Abdul Razak Dawood said that people from the industry had been demanding revision in duties and taxes on the textile sector.
However, he ruled out any change in duties on import of cotton from India to bridge the shortfall. He hoped that the country would produce a better cotton crop next year.
Responding to a question, the adviser said that the government would restore the zero-rated regime for the five leading export-focused sectors in the upcoming budget.
Talking about trade with Afghanistan and Central Asian states, he said that Afghanistan had offered a preferential trade agreement (PTA), which was not a problem.
Naseem Usman told that 1600 bales of Ghotki were sold at Rs 11,000 per maund, 200 bales of Mir Pur Mathelo were sold at Rs 11,200 to Rs 11,300 per maund, 285 bales of Saleh Pat were sold at Rs 9500 per maund, 200 bales of Chistian were sold at Rs 11,200 per maund and 400 bales of Faqeer Wali were sold at Rs 11,000 per maund.
Naseem also told that rate of cotton in Sindh was in between Rs 10,000 to Rs 10,700 per maund. The rate of cotton in Punjab is in between Rs 10,200 to Rs 11,000 per maund. He also told that Phutti of Sindh was sold in between Rs 3800 to Rs 5000 per 40 kg. The rate of Phutti in Punjab is in between Rs 3500 to Rs 5400 per 40 Kg. The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 11,000 per maund.
The Spot Rate remained unchanged at Rs 11,000 per maund. The Polyester Fiber was available at Rs 197 per Kg.