March 18, 2024

Weekly Cotton Review Rates stable despite decreased business volumes.

 The prices of cotton remained stable despite decreased business volume in the local cotton market. Textile spinners are cautious in their purchases due to limited stock availability.

The textile sector and industries are already grappling with high energy costs, and the International Monetary Fund (IMF) has urged for further increases in electricity tariffs.


Pakistan’s textile production costs exceed those of neighbouring countries, leading to unsuccessful attempts to secure orders at the Shanghai Yarn Expo. Expensive electricity has crippled industries, resulting in the closure of 35% of the country’s industrial units.


Industrialist S M Tanveer has stated that the industry cannot afford electricity priced over 9 cents per unit. Punjab’s Secretary of Agriculture, Iftikhar Ali Soho, has said that to ensure the success of cotton cultivation and production, all possible means are being employed.


During the past week, the local cotton market experienced a downward trend in cotton prices, with business volume remained low due to the upcoming Ramadan season, which typically sees reduced business activities.


Textile spinners are cautiously buying cotton, and major trading groups are engaged in limited transactions. Ginners have low stock of cotton. There is no panic like situation. Ginners have approximately less than 200,000 bales of cotton in stock, which is decreasing gradually.


According to available information, cotton cultivation is going on, partially, in several regions.


However, gas and energy crises continue to worsen the textile sector, leading to increased turmoil. Despite appeals to the government, there is no attention to the concerns of this sector, leading to growing unrest. Many mills are compelled to reduce production, exacerbating unemployment.


According to the textile sectors, the crisis is worsening due to increase in gas and energy costs, and high interest rates. Several mills are being forced to reduce production, resulting in a continuous increase in unemployment.


Every year, the federal committee for agriculture announces estimates of cotton production until February and March. However, this year, there is a delay in this announcement, along with the government’s procrastination in declaring the Minimum Support Price (MSP). Timely announcements would enable cotton growers to act accordingly.


The rate of cotton in Sindh and Punjab is in between Rs 20,000 to Rs 22,000 per maund. The rate of Phutti which is available in very limited amount is in between Rs 9,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola and oil is stable.


The Spot Rate Committee of the Karachi Cotton Association kept the rate of cotton unchanged at Rs 21,500 per maund.


According to Nasim Usman of the Karachi Cotton Brokers Forum, there is stability in the international cotton market, with the New York cotton price ranging from 93 to 94 cents per pound. According to the USDA’s weekly supply and demand report, sales of 85,800 bales were recorded for the year 2023-24. Turkey remained at the forefront with the purchase of 30,700 bales, followed by China with 28,200 bales, and Mexico with 13,300 bales.


For the year 2024-25, sales of 112,700 bales were recorded. Guatemala was on the top with 87, 100 bales. Honduras was on number second with 25,400 bales. Japan was on number third with 200 bales.


However, under the chair of Punjab’s Agriculture Secretary, Iftikhar Ali Sahoo, a meeting was convened at the Agriculture House to devise a strategy regarding cotton cultivation. All possible means should be employed to ensure the target of cotton cultivation and production is achieved.


Cotton plays a vital role in driving the national economy, with over 51% of the country’s exports attributed to cotton and its products. It is imperative to strengthen the national economy by ensuring maximum cultivation of cotton, said Sahoo.


He said that all means should be employed to achieve the target of cotton sowing by April 15th. Cotton growers should be informed that cotton sown early are less susceptible to pest attacks and prove to be more profitable. He said that committees are being formed at provincial, divisional, and district levels to achieve the target of cotton cultivation and production for the current season.


He clarified that the performance of Agriculture Department officers and staff in cotton-growing divisions will be directly linked to achieving the cotton target.


The Department of Agriculture will support and collaborate with the divisional and district administrations for cotton cultivation.


Regular review meetings regarding the cotton crop will be held weekly, preferably at the divisional headquarters in accordance with the established procedure.


He further stated that additional duties of field staff of the Department of Agriculture (Extension) are being eliminated to ensure the achievement of the target of cotton cultivation and production, so that field staff remains actively involved with the cotton growers from sowing to harvesting.


Additional Secretary Agriculture (Task Force) Punjab Abdul Qadir Shah, Director General Agriculture (Extension) Dr. Ishtiaq Hassan, Consultant Dr Muhammad Anjam Ali, Director Agricultural Information Punjab Naveed Asmat Kahlon, and other officers participated in the meeting.


However, Federal Minister Masood Malik, while speaking in a TV interview, stated that the chances of energy being 9 cents for the textile sector in Pakistan are very low, while in the entire region, including India, Bangladesh, Vietnam, and China, electricity for the textile sector is available at 7 to 9 cents.


Now, our textile industry is also competing with these countries’ textile sectors. The future is dependent on two things: either cotton prices in Pakistan decrease by at least 30 to 40 percent compared to the international market, or electricity is available at 9 cents.


Due to the shortage of cotton and the high cost of cotton, many mills have either closed down or are in the process of closing down. Whether this is temporary or permanent will depend on the prices in the next season.


Aside from that, this crisis revolves around the shortage of cotton and the high cost of cotton. This crisis will be resolved when there is an increase in cotton production per acre and funding for cotton research institutions in the country. Now it depends on the owners of the industry what they want. The survival of the industry is linked to beneficial investment in research and development.


Even if there is an increase in production expenses for cotton, it can be managed with an increase in production per acre. We need to bridge the gap between small-scale and progressive farmers’ production and the production potential of different types of cotton. For this, investment in research institutions is necessary.