February 11, 2019

 Prices of cotton remain stable.

The prices of cotton remained stable. Trading volumes are decreasing because textile mills are not taking interest.

One of the main reasons behind the slowdown is the ongoing China-US dispute. The rates of cotton are not increasing despite low production of this commodity in Pakistan and India.


Due to the cautious buying of textile and spinning mills in the cotton market last week the prices of cotton remained largely stable but the business volume remained relatively low. The production of cotton this year is 8 % lower than the last year. Textile mills are not taking interest in buying. The big textile groups have signed agreements on the import of cotton. According to some reports, textile mills have signed agreements on the import of three million bales of cotton from abroad.


The reason behind low trading volume is that the government has abolished sales tax and import duty on the import of cotton during February 1, to June 30 and mills and importers are paying for the delivery of cotton from abroad.


The prices of cotton in the Punjab and Sindh remained Rs7000 per maund to Rs 8800 per maund while Seed cotton (Kapas/Phutti) is available in small quantity from Rs 3000 to Rs 3500 per 40 Kgs in both Sindh and Punjab. Cotton in Balochistan is available at the rate of Rs 8000 to 8100 per maund while the rate of seed cotton was from Rs 3000 to 3500.


The Karachi Cotton Association (KAC) spot rate committee decreased the rate by Rs 100 per maund and closed it at Rs 8600 per maund. The Karachi Cotton Brokers Forum said that there are chances of minimizing the economic conflict between the China and USA. According to experts, there are chances of improvement in the China- USA economic ties in coming days. The China-US trade conflict is disturbing the economy of the world.


There is uncertainty in the international market. The price of New York cotton is linked with dollar. Due to fluctuations in the rates of dollar the price of New York cotton is fluctuating however for the last few days the rate of cotton is 72 to 73 American cent per maund. On the other hand, due to Chinese Lunar Festival holidays there is a slowdown in economic activities while a bearish trend was also seen in Indian cotton market.


The slowdown in international cotton and textile sector also affected the local textile sector. Few days back buyers started taking interest in cotton and textile sector but trade volume is low due to the Chinese Lunar Festival holidays. Cotton production in India has declined as compared to last year. The estimated cotton production in India was 380 million bales but due to the weather conditions the Cotton Association of India (CAI) revised the target from 380 million bales to 365 million bales reducing the target by 1.5 million bales.


The CAI has again reduced the estimate by 3.5 million bales and the new estimated target of cotton bales production is 330 million bales. The Indian textile industry is also witnessing economic slowdown like Pakistani textile industry as the demand and prices of products are showing a downward trend.


According to the estimates of weekly report released by United States Department of Agriculture the sale of American Cotton dropped by 39 percent but interestingly Pakistan is the biggest importer of American cotton.


Pakistan has signed agreements for the import of 52, 800 cotton bales. The government is giving incentives to textile industry; on the other hand, the representatives of textile industry are complaining of large import of cotton, cotton yarn, textile fabrics and comber through Duty and Tax Remission For Export (DTRE) from China and India which is affecting our industry and demanded that government should stop their import.