Afghanistan cotton sleeted amid downbeat local production

KARACHI: Textile millers have taken a sigh of relief following an official resumption of cotton import from neighbouring Afghanistan with opening of Torkham border as they need the vital industrial crop to meet domestic demand amid a shortfall of four million bales expected this year.

Businessmen on Saturday said contracts of 1.2 million bales have so far been finalised, while negotiation is underway for further contracts. The country requires four million bales worth $1.5 billion to meet the textile industry’s demand.

Millers said cotton import from Afghanistan would help in abridging demand-supply gap. Sellers are not demanding advance payments and agreed with payments after the delivery.

Cotton import from the neighbouring country resumed officially after opening of Torkham border – a major international crossing with Afghanistan.

Pakistan Cotton Ginners Association (PCGA) so far reported a 26 percent decline in cotton arrivals in the market. The further downward trend is anticipated due to rain in the cotton growing areas of Sindh and the Punjab.

The cotton crop is affected in both the province after the rains while there has been no control over pest attack.

The government set cotton output estimate of 15 million bales for the current season. The summer crop is grown during May to August. The target is equal to the local demand. Growers are expecting around 11 million bales this year. Last year the output remained around 12 million bales, below the 14.37 million bales target.

Farmers said yield is waning because of unavailability of quality seeds in the market.

Naseem Usman, chairman of Karachi Cotton Brokers Association said mills started panic buying due to reports of losses and slow arrivals, which resulted in an increase of prices.

“The panic buying continues,” Usman said. “Ginners have also increased the rates and cotton prices have gone up by Rs200 in a week.”

On Saturday, cotton rates were recorded at Rs7,900 to Rs8,850 per maund (37.324 kilogram) in Sindh and Rs8,600 to Rs8,900 per maund in the Punjab. Karachi Cotton Association’s spot committee raised cotton rate by Rs100 to Rs8,650 per maund.

Usman said cotton production in the US, Brazil and India is encouraging this year. In addition, cotton sowing has been increased by 20 percent in India, as it is mostly sown there in rainy areas.

All Pakistan Textile Mills Association (Aptma) urged the government to withdraw taxes and duties on import of raw cotton as that would facilitate the industry amid a decline in the production.

Newly-elected Aptma Chairman Amanullah Kassim Machiyara called for withdrawal of three percent regulatory duty, two percent additional custom duty and five percent sales tax on the import of raw cotton.

Machiyara said latest figures and the domestic cotton prices show the current arrivals would be well short as compared to the corresponding period last year.