Cotton prices to stay firm despite transient depression

Author: Razi Syed

KARACHI: In spite of the fact cotton prices in the country have been facing a slight correction but would remain on the higher side due to the growing demand of the commodity by textile and spinning sectors besides higher cost of imports, trade people have opined.

Import of cotton is not viable as its international prices are on parity with prices in Pakistan.

Executive members of Pakistan Cotton Ginners Association (PCGA), Pakistan Yarn Merchants Association, Pakistan Apparel Forum, Sindh Agriculture Forum, Karachi Cotton Association and leading growers were of the view that the physical prices and the arrival of fresh crop would become steady by the end of September, as there would be an influx of around 25,000 bales on each working day.

They have rejected any near future import of commodity but have remarked that garments made-up and spinning sector might go for imports during December-January 2018 to meet immediate textile sector’s needs that stands around 500 tonnes of cotton, equivalent to 30,000 cotton bales on possible shortfall in domestic arrival of cottonseed and crop during the period.

“Import by lading export-oriented textile units is being made to meet and minimise the current going season shortfall of around 2.1 million bales, as the government’s target of 13.70 plus million bales”, opined Ghulam Rabbani.

Instead of achieving the target for the crop season 2017-18, there would be a shortfall of around 2.1 million bales, he added.

He was of the view that ginners would not be affected as lint import was being made on technical grounds besides there were no cotton stocks with any ginnery.

He said that there should be a scientific mechanism to make a correct assessment of the cotton crop size as wrong assessment may have an adverse impact on the interests of the stakeholders particularly ginners and growers.

A senior member of Ginners Rana Abdul Sattar said that the size of import was not possible as the international cotton prices were hovering around 74 cents per pound with October Futures at 69.90 cents per pound, while country’s lint aprices are in the range of Rs 6,000 per maund and Rs 6,150 per maund on average.

“Due to a quality drop, the mills and spinners are in mood for importing cotton on price parity with Pakistani cotton, but on current level it is not possible to import 30,000 bales by them”, he added.

Usually, the textile sector needs to import lint in every cotton season to meet the shortfall.

Within the next 12 weeks, the market would experience new lint price that would be around Rs 6,850 per maund to Rs 6,875 per maund.

Lint prices dropped by around 500 points to 28 cents per pound in the international market and the arrival of Indian, USA and other leading cotton growing nations would be in the international market in near future.

Shakeel Ahmad maintained that the lint price would become stable after steadiness in the supply line and better influx of seeds into the ginneries.

He observed that the recent lint prices are the outcome of excess demand of the commodity in the domestic market.

There is a dire need to expiate working of Joint Action Group on cottonseed discussing parameter of registered seed companies’ performance besides it decision’s on fake companies that should be sorted out on war footing.

The seed amendment bill and plant breeders’ rights should also be kept in order to maintain country’s quality need of produce.

According to the International Cotton Advisory Committee and owing to an increase in planted area, the world lint production will rise by 2 percent to 23.4 million tones.

China’s cotton production is estimated at 4.9 million tonnes. US production is estimated at 3.8 million tonnes. World cotton mill use is expected to remain stable at 24.3 million tonnes in 2017-18 as high cotton prices discouraged growth in demand.

US come next with 19.86 million bales followed by India with 21.75 million bales and Pakistan with 12.17 million bales.

Published in Daily Times, July 8th , 2017.

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