NASEEM USMAN | 23 Sept 2024
KARACHI: Cotton prices continue to rise, with international rates also surging. Trading volume has improved. However, cotton production has dropped by a concerning 64%. Cotton imports are increasing, and cotton yarn imports are also on the rise. Textile exports have grown by 5.37%.
According to All Pakistan Textile Mills Association (APTMA) Chairman Kamran Arshad said providing affordable electricity to the textile sector would eliminate the need for an IMF package. The Punjab government plans to establish a committee to boost cotton production.
The local cotton market witnessed a surge in cotton prices and improved trading volume over the past week. Textile mills showed increased interest in purchasing, primarily due to concerns over the country’s cotton production falling significantly short of estimates.
The Pakistan Cotton Ginners Association released cotton production figures up to September 15, revealing that the country’s cotton production stood at fourteen lac and thirty four thousand bales during this period. This represents a 63.55% decline compared to the thirty nine lac and thirty four thousand bales produced during the same period last year. This significant drop in production has prompted textile spinners to increase their purchases of local cotton.
The Pakistan Cotton Ginners Association (PCGA) report cites several reasons for the alarming decline in cotton production. However, the current report is causing concern, and it is anticipated that cotton production in Punjab province will increase in the coming days. If production remains significantly low, imports will rise, potentially reaching 60 lac bales, requiring substantial foreign exchange.
According to received information, import contracts for approximately 18 lac bales have already been signed, with imports continuing unabated. Importers benefit from the Export Facilitation Scheme (EFS) for imported cotton, whereas they have to pay 18% tax on local cotton. Furthermore, large-scale imports of cotton yarn are also underway, causing distress among spinners.
Textile experts point out that while global demand for Pakistani textile products remains strong, high production costs at home are hindering export growth. Expensive energy is the primary obstacle, yet government is not paying any attention despite repeated industry appeals. Additionally, spinners are facing significant liquidity constraints due to delayed tax refunds totalling billions of rupees.
The rate of cotton in Sindh is in between Rs 18,300 to Rs 18,500 per maund. The rate of Phutti is in between Rs 7,400 to Rs 8,400 per 40 kg. The rate of cotton in Punjab is in between Rs 19,300 to Rs 19,500 per maund. The rate of Phutti in Punjab is in between Rs 7,500 to Rs 9,000 per 40 kg. The rate of cotton in Balochistan is in between Rs 18,300 to Rs 18,500 per maund and the rate of Phutti is in between Rs 7,400 to Rs 8,800 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 2,00 per maund and closed it at Rs 18,700 per maund.
Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, stated that following a mixed trend in international cotton prices, the New York cotton futures price increased to 73 US cents per pound.
According to the USDA’s weekly export and sales report, one lac and six thousand and eight hundred bales were sold for the 2024-25 crop year. Vietnam topped the list with fifty one thousand and six hundred bales, followed by Pakistan with twenty four thousand and five hundred bales, and India is on number third with thirteen thousand and four hundred bales. For the 2025-26 crop years, ten thousand and six hundred bales were sold to Mexico. Total exports stood at one lac and thirty thousand bales.
Pakistan’s textile group exports saw a 5.37% increase in the first two months (July-August) of the current fiscal year 2024-25, reaching $2.915 billion compared to $2.766 billion during the same period last year, according to the Pakistan Bureau of Statistics (PBS). The PBS’s trade statistics reveal that the country’s total exports stood at $5.069 billion (provisional) during July-August 2024, up from $4.430 billion in the same period last year.
According to the latest cotton statistics released by the Pakistan Cotton Ginners Association (PCGA) as of September 15, 2024, total cotton arrivals have reached 1,434,028 bales. This represents a significant decrease of 63.55% compared to the 3,933,846 bales recorded by the same date in 2023. In Punjab, cotton production has amounted to 538,686 bales this year, in contrast to 1,544,634 bales produced by this date last year, indicating a 65.13% decline in production.
Similarly, in Sindh, 895,342 bales have been produced this year, compared to 2,389,212 bales during the same period last year, reflecting a 62.5% reduction in production. In Balochistan, the total cotton production for the year stands at 34,900 bales. The significant reduction in cotton production in Pakistan this year can be attributed to several key factors, including climate change, extreme heat and drought, flooding rains, and pest infestations.
These challenges have pushed production costs beyond the reach of many farmers, while no climate-resilient cotton variety capable of yielding optimally under such harsh conditions has been developed. We urgently require cotton strains that can withstand temperatures exceeding 43°C while maintaining high productivity.
Full Report : https://epaper.brecorder.com/2024/09/23/5-page/1008252 (Source: Business Recorder)