March 18, 2019

Weekly Review Cotton prices witness upward trend.

The upward trend was seen in the prices of cotton. Textile mills were active and involved in buying due to which buying was increased.

The market trend shows that prices of cotton may increase in the coming days. The new season is about to start and government should take immediate steps to increase the production of cotton.

 

During the last week textile and spinning mills increase the buying while the ginners also started selling cotton in the stock due to which trading volume increase to some extent due to which prices of cotton shows upward trend.

 

The prices of cotton in both Sindh and Punjab remained Rs 7000 to Rs 9000 per maund while the price of Seed cotton (Kapas/Phutti) is from Rs 2800 to Rs 3600 per 40 Kgs in both Sindh and Punjab. The cotton in Balochistan is available at the rate of Rs 7800 to 8100 per maund while the price of seed cotton which is available in very small quantity is from Rs 3200 to Rs 3600.

 

The Karachi Cotton Association (KAC) spot rate committee increased the spot rate price by Rs 100 and closed the rate at Rs 8700 per maund.

 

In the local market the demand of textile products and cotton yarn has increased but due to delay in payments there is financial crisis in the market. On the other hand the import of cotton which was stopped from India has started to some extent. The ginners have the stock of 1 million bales which will be sold in coming days.

 

Chairman Karachi Cotton Brokers Forum Naseem Usman said that over all bullish trend was seen in international cotton market. According to the analysis of local and international market upward trend will be seen in the prices of cotton in the coming days. The fluctuation was witnessed in New York Cotton Rate of Promise (Waday Ka Bhao) due to which the prices of cotton shows upward trend while the prices of cotton in China shows positive trend.

 

Naseem Usman said that during the last 10 to 15 years the production of cotton continuously increased in India. The production of cotton reached 4 crore bales three to four years ago and India has become the second largest cotton producer in the world after America but due to defect in the cotton seed Gulabi Sundi attacked the crop and as a result cotton production decreased.

 

Last year cotton production of India was 3 crore 65 lac bales but during the current year it is expected that that cotton production of India will be between 3 crore 25 lac to 28 lac bales which is 40 lac bales less as compared to the previous year. The Indian government has asked the international company Monsanto to provide seeds of cotton which will increase the production while the Indian government has also asked the Monsanto to pay the damages which was done due to the supply of low quality cotton seed.

 

The Pakistani organizations related to cotton business has asked the Pakistani government to buy good quality seeds from Monsanto. Several meetings were held in this regard but no agreement was signed yet. The government of Pakistan should take steps for the production of good quality seeds locally as well as good quality seeds should be imported.

 

Indian Cotton Association organized a conference on 6th and 7th March in Mumbai which was attended by 249 cotton experts of international markets, traders and importers.

 

President Indian Cotton Association Atul S. Ganatra told during the meeting that last year cotton production of India was 3 crore 65 lac bales but during the current year it is expected that cotton production of India will be between 3 crore 25 lac to 28 lac bales which is 40 lac bales less as compared to the previous year. The reason of low production of cotton is weather conditions and low rains. He said that expected consumptions of local mills this year wills will be 3 crore 15 lac bales. At the end of the year stock will be 17 lac bales as compared to the last year stock of 26 lac bales

 

Atul S. Ganatra further said that this year in June and July the rate of cotton which is Per Candi (356 kg) is from Rs 42000 to Rs 43000 is expected to be from Rs 47,500 to 48000. He said that government will increase support price from 10 % to 15 % in the next season while the government has increased the support price by 26 % during the current year.

 

The delegates of the conference said that New York Cotton Rate of Promise (Waday Ka Bhao) which is between 75 to 76 American cent is 80 cent till July.

 

The reason of giving reference of international conference held in Mumbai is that India is our neighboring country the government of India is active and taking practical steps for the increase in production of cotton while in our country government only make promises while the implementation is very slow.

 

Prime Minister Imran Khan has shown his resolve of increasing the production of cotton by 15 million bales. The Ministry of National Food Security and Research Pakistan Central Cotton Committee has asked the government to announce the support price or Indicative Price of Cotton Seed Rs 3500 per 40 kg while the Ministry also gave the proposal to buy 5 lac bales of cotton through TCP. If practical steps like India will be taken to increase the production of cotton then there is no doubt that target of cotton production given by Prime Minister will be achieved. The country will be self sufficient in cotton and we can save our foreign exchange which is spent on import of cotton.

 

After the harvesting of wheat sowing season of cotton is going to start and from now on steps would be taken to increase the production of cotton then our country will be sufficient and there will be no need of importing cotton. This year water will be available in ample amount while the farmers got reasonable price of cotton seed.

 

There is a need to sow cotton on the land on which sugar cane was grown. Chinese agriculture experts and scientists are already helping Pakistan in order to increase the production of agriculture products.

 

Cotton Cooperation of India bought 11 lac bales of cotton from ginners and in coming days, 4 to 5 lac bales will be bought by CCI. The Cooperation will sell cotton bales from April. In this way CCI helps ginners and farmers. Pakistan should also work on the same grounds and departments like TCP should buy and sell cotton bales to help farmers. In our country for the last four to six years world's largest company Louis Dreyfus Company was involved in the trading of cotton and sold the cotton bales to textile mills in advance. In a way there are doing Hedge Trading but the government has imposed ban on Hedge Trading locally.

 

Moreover, the experts are of the view that in the coming days, prices of cotton will be increased. Up till now the ginners has limited stock of 1 million bales while the new crop will be expected to come in four to five months.