Cotton prices steady despite ginners-brokers dust-up

KARACHI: Local cotton prices were stable in the outgoing week as mills actively bought silver fibre, while around 15,000 bales from new crop were traded by June 18, traders said.

Around 12 cotton ginning factories have started partial operations in Sindh, while five ginning factories in Punjab are processing Sindh’s cotton, whereas arrival in Punjab has also started partially.

Few days back Sindh’s ginning factories and some seed-cotton brokers entered into a dispute. As a reaction, Sindh’s ginning factories have stopped buying in the province. Pakistan Cotton Ginners' Association (PCGA) Sindh chapter has also written a letter to the cotton commissioner warning that cotton production would also remain low this year. Sindh’s cotton is going to Punjab and later on Sindh’s mills would be compelled to buy cotton on higher rates. Thus, they demanded, Sindh’s seed-cotton should not be allowed to move to Punjab. Ginners of Punjab are annoyed with such demand.

Cotton traders said the federal government had proposed an increase in the GST (general sales tax) on cotton to 17 percent from 10 percent and PCGA, instead of resolving this issue, indulged into this meaningless dispute. Such increase in the GST would be harmful for oil mills and ginning factories.

Cotton prices remained at Rs13,000 to Rs13,300 per maund (40kg) in Sindh, while seed-cotton traded at Rs5,700 to Rs6,000 per 40 kg.

Cotton rates in Punjab stood at Rs13,700 to Rs14,000 per maund while seed-cotton was sold at Rs6,200 to Rs6,300 per 40-kg over there.

Karachi Cotton Association’s spot rate committee increased the official spot rate by Rs300 to Rs12,600 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman told The News cotton prices in the international market mostly remained stable.

Cotton traded at 84 to 85.5 cents per pound at New York Cotton Market.

According to USDA weekly report, cotton export increased by three percent. Pakistan remained the top importer with 53,000 bales, followed by Turkey with 17,000 bales.

New cotton arrival has started in Brazil, where prices remained steady. Prices were also stable in Central Asia while some decline in the rates was recorded in India.

On the other hand, ministry of food security in Pakistan was informed that cotton crop was target to be sown over 2.32 million hectares in the country. Of which, 84 percent or 1.96 million hectares had been cultivated and production target was likely to be achieved in this weather, according to the reports.

This year, cotton production target is set at 10.51 million bales.

Last week Federal Minister for Food Security Syed Fakhar Imam had chaired a meeting regarding progress of cotton crop. The meeting told due to water shortage, cotton sowing target could not be completed in Sindh.

Due to continuous decline in cotton production, number of ginning factories has dropped to 440 in the country from 1,300 ginning factories five years ago.

Traders said if the government did not waive sales tax over cottonseed ‘banola’ oil, cotton crop would face more problems.