KARACHI: Cotton trade couldn’t snap the lockdown lull despite reopening of the market as buyer spinning mills seemed to be sitting on the raw material that remained unused, industry people said on Saturday.
Karachi cotton market continued to see no trade activity during this past week, the people said. Ginners have stocks of 50,000 bales, but there are little chances of their sale as spinning mills have unused inventory with them.
Cotton price was quoted between Rs6,500 and Rs8,500 per maund despite that there was no trade in Sindh and Punjab. Spot rate of Karachi Cotton Association remained firm at Rs8,600 per maund.
Traders said a few ginning factories would resume operation in Sindh after Eid holidays to fulfill the previous trade deals.
Government decided to allow partial reopening after two-month long lockdown following the coronavirus outbreak. Textile industries, accounting for 60 percent of export revenue, were shut down. Local mills have huge inventory of finished production. Several mills stopped further production following supply disruption.
Karachi Cotton Association kept issuing official spot rate as there was no trade activity in the cotton market.
Analysts said ginners are going through immense pressure as bank interests on their loans are increasing, while weight of cotton is decreasing amid no trade.
“Ginners have to pay billions of rupees dues to growers and traders,” said the analyst. “Growers will face difficulty in sowing of the new seeds.” Amid complaining agriculturists, the government turned down an intervention price for cotton procurement in the public sector. The Economic Coordination Committee of the cabinet in a meeting said it was a provincial subject.
The decision was widely rejected by the stakeholders. Growers in upper Sindh and Punjab were already switching to other cash crops instead of cotton, as they were not receiving the due rates. Since 2010, cotton cultivation area has declined by 20 percent in the country, while corn and sugarcane production have increased instead of cotton. An estimate put the cotton requirement at 15 million bales with the agriculture country having capacity to meet half of the demand.
Karachi Cotton Brokers Association Chairman Naseem Usman said trading activity was recovering swiftly in New York Cotton Market during the week.
China imported 153,600 bales of cotton during the week and remained the top importer. However, overall exports of cotton decreased 25 percent during the week, which resulted in decline in prices at futures of New York Cotton Market.
Prices remained stable in China while some decline was witnessed in India, according to a weekly report of United States Department of Agriculture.