Traders await next crop as cotton stocks mostly depleted

KARACHI: Trade remained thin in the local cotton market with spinners mostly avoiding any new deals, while latest numbers show ginners are left with less than 40,000 bales, traders said on Saturday.

There were some isolated deals while trade activity remained very little. However, prices of cotton remained stable while stakeholders were focused towards the next crop. Both the public and private sector are active in spreading awareness among the growers.

Cotton prices in Sindh remained at Rs10,200 to Rs10,500 per maund (40kg) while Punjab cotton fetched rates at Rs11,000 to Rs11,300 per maund. Some deals of Balochistan cotton or credit deals were done at Rs12,500 to Rs13,000 per maund. Spot rate committee of the Karachi Cotton Association (KCA) kept the official spot rate intact at Rs11,300 per maund.

Chairman Karachi Cotton Brokers Association, Naseem Usman, told The News that fluctuation continued in the international cotton markets. After some fluctuation, rates in the New York Cotton Market closed at the stable level.

According to weekly export report of the USDA, exports declined by 17 percent to 63,700 bales only. Pakistan remained at the top importer with 16,200 bales followed by Bangladesh with 15,800 bales.

Due to lockdown in India, said the traders, cotton demand has decreased by eight percent to 30.3 million bales, which remained at 33 million bales last year. Last year, India had cotton closing stock of 9.8 million bales, which has increased to 11.8 million bales this year. Last year, cotton production in India was recorded at 37.1 million bales, which has dropped by 1.1 million bales to 36 million bales this year. Because of a long strike by the farmers in India, cotton sowing has remained below the target this season.

Prices in Brazil, Central Asia, and Argentina remained stable. However, new crop cotton would soon start in Brazil.

Traders said that cotton prices remained higher in the US market during the outgoing season, so the local mills would be very much cautious in making of contracts for the purchase of lint in this season 2021-22.

Cotton sowing is in full swing in Sindh while it has also started in some scattered areas of Punjab. Cotton arrival from lower Sindh is expected in the end of May while one or two ginning factories of Sanghar are expected to start operations partially by the end of May or the first week of June.

Market sources said substandard cotton seed had remained the major problem in low production. However, the government is taking serious action against sellers of substandard seed and some arrests have also been made. If such action continued, the cotton production will increase in this season.

The task force of Pakistan Cotton Ginners Association (PCGA) is visiting the areas of the ginning factories, where they are raising awareness among the growers for bringing more land under cotton cultivation, while bank officers are also visiting with them to guide them regarding credit availing. Traders said due to a decline in the cotton production in the country, orders worth $4 billion have been placed for the import of 7.0 million bales.