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September 19, 2019

Cotton supply hits tailspin on output, price turbulence


September 19, 2019

KARACHI: Cotton crop arrivals at ginning factories hit a tailspin as massive monsoon-related production losses coupled with unviable prices squeezed the supply to the market that may have to rely on imported cotton to meet its demands, industry officials said on Wednesday.

Pakistan Cotton Ginners Association (PCGA) data showed cotton arrivals by September 15 were recorded at 1.852 million bales, down 26.41 percent, compared with 2.517 million bales during the same period last year.

The slow arrival of crop in the local markets could be attributed to prevailing market-forces-driven rates that growers said were hardly viable for them and would remain so until the announcement of a fair support price by the government.

Naseem Usman, chairman Karachi Cotton Brokers Association, said, “It is an alarming situation for the textile sector of the country, while shortage is expected to go beyond 26 percent in the season”.

Cotton arrivals from Sindh recorded a shortage of 18.42 percent to 1.852 million bales against 1.537 million bales arrived in the factories by September 15 last year.

Arrivals from Punjab were down 38.96 percent to 598,314 bales, compared with 980,139 bales in the corresponding period a year ago.

Of total arrivals, 1.553 million bales were sold to spinners, while 30,725 bales were purchased by exporters. A total of 268,072 bales remained unsold with the ginners.

As many as 197 factories, out of a total of 403, have commenced their operations, while a total of 234 mills were in the operation at this time last year.

Fortnightly inflows remained at only 496,699 bales, compared with 2.517 million arrived in the factories during September 1 to September 15 last year.

Prime Minister Imran Khan, while giving a cotton production target of 15 million bales this year, had announced that the support price of seed cotton would be fixed at Rs4,000 per maund (40kg), Usman said.

Usman said had the support price been announced it would have encouraged the growers for more sowing.

Punjab was expecting a crop of around 8 million bales, Usman said and added while Sindh crop would not be above 4 million bales.

“We expect a production of around 11 million bales in the country, as monsoons have damaged the crop in both the provinces,” he said.

He said the total requirement of factories in the countries was around 15 million bales, adding that thus, the country might import 4 million bales to fulfill the requirement. “It will cost around $1.25 billion,” the cotton broker said.

Usman further said this year’s crop was a failure, as recent monsoon led to the attack of worms and virus on the crop.

Stakeholders are of the view that import of cotton would become a headache for Pakistani factories, as they might not be able to import from India due to tension over Kashmir and suspension of trade between the two countries. Besides, crop in India was not encouraging as well, they added.

Arrivals in Indian factories would commence from October. “The crop is also under depression in India,” said one industry official.

Stakeholders have urged the government to form a policy for the next year and announce a support price on the pattern of wheat, sugarcane, and paddy to save the cotton growers, who were switching to maize, corn, and other crops in the country, as they were not getting proper incentives for their production.