January 10, 2022

Rate of quality cotton soars to Rs20,000  maund.

 The rate of quality cotton reached Rs 20,000 per maund after increasing by Rs 1000 per maund. 

The Spot Rate also reached at the highest level of Rs 18600 per maund after increasing by Rs 600 per maund. Pakistan Kisan Ittehad and Pakistan Cotton Ginners Association are protesting against the imposition of 17 percent General Sales Tax on cotton. Textile sector is bearing a loss of billions of rupees due to power crisis.


The local cotton market witnessed a bullish trend during the last week. The rate of quality cotton reached at Rs 20,000 per maund after increasing by Rs 1000 per maund. The Spot Rate also reached at the highest level of Rs 18600 per maund after increasing by Rs 600 per maund.


Bullish trend remained continued in international cotton market despite fluctuations.


The Rate of Future Trading of New York Cotton after fluctuation closed at 114.62 American cents while on Tuesday rate reached at the highest level of 117.68 American cents.


Textile and spinning mills were involved in cautious buying due to high rates of cotton while ginners were not selling cotton on the expectation that the prices of quality cotton may increase further due to which the trading volume is low. One more reason of the low trading volume is that one international organisation is involved in selling cotton and the textile mills were contacting that organisation for buying quality cotton. The trading of that organisation was not reported in the market.


During the last few days bullish trend was witnessed in the rate of international cotton markets. Bullish trend prevails in the rate of Future Trading of New York Cotton. Increasing trend was witnessed in the rate of Future Trading of New York Cotton. The Rate of Future Trading of the New York Cotton for the month of March after increase has reached at 117 American cents.


According to the sources of cotton ginners there is a limited stock of cotton in the country which will end in the month of February. The new crop of cotton will arrive after five months probably in the month of June. During the gap of five months mills have to buy cotton from other mills. Small mills will opt for the second option.


As per the textile mill sources, this year the rate of cotton is double than the rate of last year. The financial needs have increased. The bank limits of some textile mills have already exceeded. They were facing problems in buying. The rates of cotton yarn and textile products have witnessed a significant increase. This is the reason that textile mills are earning profits; especially textile spinners are earning handsome profits.


The rate of cotton in Sindh is in between Rs 16,000 to Rs 20,000 per maund while Phutti is almost finished. The rate of Banola is in between Rs 1600 to Rs 2400 per maund.


The rate of cotton in Punjab is in between Rs 16500 to Rs 19000 per maund. The rate of Phutti is in between Rs 6000 to Rs 8100 per 40 kg. The rate of Banola is in between Rs 1900 to Rs 2500 per maund. The stock of cotton in Balochistan is almost over.


The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 600 per maund and closed it at Rs 18600 per maund.


Chairman Karachi Cotton Brokers Forum Naseem Usman told that overall a bullish trend was witnessed in international cotton markets. According to the weekly export report of USDA this week more one lac forty three thousand bales were sold. This time too China was the number one buyer with 47000 bales, Pakistan was on number two with more than 20,000 bales, and Turkey was on number third with more than 18000 bales.


According to the private importers of Pakistan, many textile spinners have signed agreements for the import of cotton from abroad in large quantity.


Bullish trend also prevails in Brazil, Africa and Central Asian States. Significant increase was witnessed in the rate of cotton in India where rate of cotton after increasing reached at Rs 73900 per candy of (356 Kg) which is at the highest level in history.


Moreover, President Cotton Association of India had requested textile ministry that they should arrange an emergent meeting with agriculture ministry so that permission can be granted for new seed. In an interview given by Chairman Cotton Association of India Attul Ganatra to an Indian TV, he said increase in cotton production is impossible without the approval of new cotton seed. While giving reasons of significant increase in the prices of cotton in India, Ganatra said that the main reason is that farmers had increased the prices of Phutti. He said that rate of cotton in India is more than the rate of cotton in New York Cotton market.


Other participants said that cotton production estimates in India were not correct. Cotton production is less than the estimates.


In Punjab during the last month of December textile industry faced a loss of 25 Crore dollars due to curtailment of natural gas. The supply of gas was suspended for 15 days.


Moreover, according to the sources of ministry of commerce textile mills were not given power supply from the national power grid.


Executive Director All Pakistan Textile Mills Association Shahid Sattar confirmed that natural gas is not being given to the textile sector due to which the sector is bearing the loss of 25 Crore dollars. However, government restored the gas supply after 15 days. Ministry of Energy, restored the gas supply form December 29 to the mid of January after decreasing it by 15 MMCFD. After the winter, the routine gas supply will be restored.


In a letter written to Advisor to Prime Minister on Commerce Abdul Razaq Dawood, All Pakistan Textile Mills Association (APTMA) protested over power outages due to which the export sector is bearing the loss of 25 Crore dollars to 40 Crore dollars per month.


The Pakistan Kissan Ittehad (PKI) has claimed that proposal to withdraw sales tax exemption on agricultural implements, seed and other agricultural inputs will raise the cost of cultivation by 5 to 10 percent.


Expressing deep concerns over the proposals in Finance Supplementary Bill 2021 tabled in the National Assembly, PKI President Khalid Mahmood Khokhar, while addressing a press conference on Monday, said the withdrawal of sales tax exemption for various crop seeds, agriculture inputs and farm implements will have far-reaching consequences for the already struggling farming community.


In addition to an increasing input cost, he added, the Finance Supplementary Bill is inconsistent with the existing government policy and the country’s food security needs. The 17 percent sales tax on agriculture implements, cottonseed cake, cottonseed oil, maize, rice canola, sunflower, vegetables and potato seed will directly impact the cultivation cost and put quality seed inputs out of reach of many farmers.


It is even more concerning that these taxes come at a time when the government is looking to promote oil seed crops through subsidies to lessen the burden on imports. In particular, the tax on cotton seed and its derivatives will adversely impact the cotton farmers and the allied industry. Similarly, maize crop has a major contribution towards the growth of poultry industry, with 70 percent of grain going into feed. The dairy industry is also highly dependent on the maize crop, with silage requirements increasing by the day. In 2020-2021, almost 130,000 metric tons of grain and 80,000 metric tons of silage were exported from Pakistan. With the imposition of sales tax on maize seed, the export competitiveness of maize crop will face a major challenge and hurt the livelihoods of farmers. Rice and vegetable seeds also face the same predicament. The additional tax will discourage farmers from adopting high yielding hybrid seeds, resulting in overall productivity loss and food security concerns, Khalid Khokhar added.


The Pakistan Kissan Ittehad (PKI) demanded that the government must review its decision to withdraw sales tax exemption on these key agriculture inputs, and provide relief to the farmers during these testing times.


Meanwhile, Pakistan Cotton Ginners Association in its General Body meeting rejected the ‘mini-budget’. Chairman Sohail Mahmood Harl said that imposition of 17 percent GST on Cotton Seed Oil, Cotton Seed Cake and Cotton seed had a bad impact on ginning industry.