Naseem Usman
24-02-2025
KARACHI: The cotton market continues to face a bearish trend, with trading activity remaining limited. Internationally, prices at the New York Cotton Exchange have also dipped, exacerbating the crisis for local textile spinners. Economists have warned that the spinning sector could face a complete collapse if urgent government-led reforms are not implemented.
Industry sources report that challenges for textile spinners are intensifying daily. Spinning units have demanded the government ensure a “level playing field” between cotton imports and local production. Dr Jesumal Lemnai, Chairman of the Pakistan Cotton Ginners Association (PCGA) stated that the government and the Special Investment Facilitation Council (SIFC) have assured the removal of taxes on the ginning industry in the upcoming budget.
In a bid to boost cotton production, the PCGA has written a letter to Prime Minister Shehbaz Sharif, urging the formulation of a uniform policy. Meanwhile, the recent data shows a 16% increase in textile exports, though internal industry challenges continue to overshadow these gains.
Cotton ginners in Rahim Yar Khan have strongly protested against new Federal Board of Revenue (FBR) taxes, claiming the levies are unaffordable. “Even if we sell our factories and homes, we cannot pay these taxes,” one of the ginners stated. On the cultivation front, early cotton sowing has begun in Sindh and Punjab. Chairman Cotton Ginners Forum Ehsanul Haq noted that current weather conditions remain favourable for the crop.
Head Transfer of Technology Pakistan Central Cotton Committee Sajid Mahmood emphasised that the All Pakistan Textile Mills Association (APTMA) must take concrete steps to revive and develop cotton production.
He stressed, “Research and development institutions, particularly the Pakistan Central Cotton Committee (PCCC), require full financial and technical support to introduce disease-resistant cotton varieties and modern production technologies.”
During the past week, the local cotton market experienced an overall decline in prices. Textile spinners are increasingly relying on imported cotton, leading to reduced demand for local cotton and consequently limited trading activity. The textile sector continues to demand that the government lower energy costs and extend the Export Finance Scheme (EFS) facility to local cotton to ensure a level playing field. However, no progress has been made on these demands so far.
It is anticipated that a decision on the matter may be included in next year’s budget, with reports suggesting the Special Investment Facilitation Council (SIFC) is also taking an interest in the issue. Ginners currently hold a stockpile of around 400,000 cotton bales and are under stress due to the lack of buyers.
Cotton cultivation has commenced in several cotton zones across the country, with extensive planting under way in many districts of Sindh, including Badin, Thatta, Hyderabad, Mirpur Khas, Sanghar, and Umer Kot. Meanwhile, partial cultivation has begun in Punjab’s districts such as Bahawalnagar, Rahim Yar Khan, Vehari, Sahiwal, and Bahawalpur. However, concerns persist that cotton cultivation may fall short of expectations this year due to a significant drop in the prices of cotton and cottonseed in local market.
The Federal Committee on Agriculture has yet to finalise production and cultivation targets for Cotton Year 2025-26. In contrast, the USDA has reported that Pakistan’s total cotton production during Cotton Year 2024-25 is projected to be 27% higher than previous estimates.
Chairman of the Cotton Growers Forum, Ahsan-ul-Haq, highlighted that the FCA typically sets cotton cultivation and production targets in the first week of February each year. However, this year’s FCA meeting has not been held, potentially creating challenges for cotton stakeholders in strategising due to the absence of clear targets.
They mentioned that due to higher-than-expected temperatures, cotton cultivation has begun in several cities across Pakistan, and in the absence of rainfall, the cotton crop could significantly improve.
However, concerns are being raised about a potential decline in cotton cultivation this year due to record imports of cotton and cotton thread resulting from sales tax exemptions, which have caused domestic prices of cotton and cottonseed to fall far below expectations. This situation could force Pakistan to import billions of dollars worth of cotton as well as edible oil in the coming year.
In Sindh province, the price of cotton is currently between 16,500 to 17,500 rupees per maund, depending on quality and payment conditions, while in Punjab province, it ranges from 17,200 to 17,700 rupees per maund. PRIMARK cotton settled at a price of 18,800 rupees. Prices for Banola, oil, and oilcake remained relatively low. A further slowdown in business activity is anticipated during the month of Ramadan.
The Karachi Cotton Association’s Spot Rate Committee has kept the spot rate stable at 17,500 rupees per maund.
https://www.brecorder.com/news/40349645/weekly-cotton-review-bearish-trend-persists-amid-low-trade-volumes (Source: Business Recorder)