Prices down as coronavirus fears grip cotton market

KARACHI: Cotton prices in the local market decreased Rs100 to Rs200/maund during the outgoing week, as buyers remained on the sidelines, while volume remained low, stakeholders said on Saturday.

Cotton markets were down across the globe along with other markets due to pandemic of coronavirus that affected the trade, a local stakeholder said.

Pakistan’s textile products are usually exported to the US and European countries, and due to the pandemic, they have suspended their imports, hitting the cotton exporters hard.

Stakeholders said due to overstocking of goods and suspension of exports, Pakistani industry was near to closure. Local buyers were also cautious due to closure of markets in the country. Several mills have cut down their production.

During the week, cotton prices in Sindh and Punjab varied between Rs6,800 to Rs8,800/maund.

Naseem Usman, chairman of the Karachi Cotton Brokers Association, said that international cotton markets also remained down, as trade remained under pressure.

New York Cotton Futures further dropped 4 cents to the lowest level in 10 years. Earlier, it had reached 54 cents/pound before July 2009. During a week’s time, New York cotton market saw 30 percent decline in prices, while Pakistani importers purchased highest 96,000 bales from it during the week, he added. Both China and India were also facing crisis, while Cotton Corporation of India has set a purchase target of 9 million bales from the market. However, currently deals were made for the purchase of 4.5 million bales. Due to low interest of cotton buyers, ginners were also facing pressure despite the fact they were having stocks of only 500,000 bales.

By March 15, 8.57 million bales were produced, down 20 percent, while final production is expected to reach 8.6 million bales.

Usman said that Prime Minister Imran Khan has pledged to improve cotton production in the country and set a support price. However, cotton sowing has partially started in Sindh, but no support price was announced.

Experts are of the view that cotton growers were facing problems in this season, and if they were not provided support price, cotton production would remain suppressed in the next season, as well.

They said the government has made any effort to provide good quality cotton seed.

Keeping the view the current situation, textile sector, including spinners and value-added sector, has demanded release of stuck refunds, including sales tax, as industry was facing liquidity crisis.

In the meantime, Punjab Agriculture Department has announced commencement of cotton cultivation across the province from April 1, 2020. Agriculture Assistant Director Naveed Asmat Kohloon said that the agriculture department would issue advisory on cotton cultivation.

Farmers are advised to follow instructions of the agriculture department for enhanced cotton production, he added.