Cotton arrivals hit three-decade low of 5.6 million bales

KARACHI: Cotton arrivals in ginning factories hit the three-decade lowest level of 5.6 million bales as the industry is concerned about prospects of textile production without sufficient raw material and no alternative arrangement by the government, traders said on Saturday.

Till April 1, a total of 70,200 bales were exported, while 5.49 million bales were sold to textile mills. Ginners have 85,070 bales in stocks, according to Pakistan Cotton Ginners Association.

Since no data was released by the Pakistan Cotton Ginners Association during this time last year due to the pandemic lockdown, there is no comparison. However, last fortnightly data showed a decline of 34 percent in the arrivals compared to last year.

Karachi Cotton Brokers Association Chairman Naseem Usman told The News that production of 8.7 million bales was recorded last year. Current production was down by 3 million bales, which is the lowest production in last 30 years.

Industry is concerned about the consistent decline in cotton production in the country and indecisiveness of the government about the steps to meet the demand of local textile businesses as it first allowed cotton imports from India and later disapproved the decision on political issues.

Arrivals from Punjab have been recorded at 3.5 million bales, while Sindh contributed 2.1 million bales. Currently, only five mills are in partially operation in Punjab. No mill is operating in Sindh.

Usman said partial cotton sowing for the new season has started in Sindh while it is likely to begin in Punjab from April 15.

Mills remained cautious of buying during the last week, which affected the trade volume and rates decreased Rs500 to Rs600 per maund in the local market. In the international market, prices also were down 3 to 4 cents per pound.

Cotton spot rate in the local market decreased Rs1,100 per maund in two weeks, which was the highest decline in the history of the Karachi Cotton Association, a trader said.

Cotton rates in Sindh decreased to Rs10,200 to Rs10,500 per maund. Lint in Punjab fetched prices of Rs11,000 to Rs11,200 per maund. Spot rate committee of the Karachi Cotton Association reduced the spot rate by Rs700 per maund to Rs11,200 per maund.

The trader said the ginners were left with very little quantity of cotton and they might want to sell that as soon as possible as sweltering summer would affect weights of lint, which has made spinners cautious.

Besides, depreciation in the dollar value could also affect prices in the local market. There were further speculations related to dollar prices and mills did not want to take risk of huge buying. A decline in yarn prices was also a reason behind decline of cotton rates in the local market.

New York Cotton market witnessed a decline to 77 cents per pound. It was down because of trade conflict of the US and China. China is avoiding purchases from the US market. It also cancelled deals of around 13,000 bales from previous deals.

The weekly report of United States Department of Agriculture showed a decline in exports by 71 percent during the week. Cotton prices were also down in Brazil, Central Asia, Argentina and India.