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October 25, 2020

Sindh ginning factories stall as cotton shortfall aggravates

Business

October 25, 2020

KARACHI: A score of ginning factories shut down their operation in Sindh as significant reduction in cotton arrivals triggered shortage of the industrial input in the market that recently underwent lockdown-sparked supply disruption and torrential rainfall, traders said on Saturday.

Traders told The News that several ginning factories have been closed in the middle of the season due to critical decline in cotton production. “Ginning factories from Hyderabad to Nawabshah were closed, while highest cotton producer district in the country Sanghar also witnessed closure of ginning factories,” a trader said.

Cotton arrivals in factories across the country dropped 40 percent by October 15. Cotton arrivals in factories were recorded at 2.7 million bales, down from 4.4 million bales in the corresponding period a year earlier, according to Pakistan Cotton Ginners Association. Instead of selling lint, some ginners sold cottonseed in the market and closed their factories, said one stakeholder.

Traders said trading activity of cotton remained slow in the market during the outgoing week, as both buyers and ginners remained cautious of the prices. Ginners who purchased cottonseed on higher prices were not willing to sell lint at lower rates.

The big players of textile industry are importing cotton while medium and smaller groups are buying lint from the market.

Value-added textile sector demanded of the government to encourage duty-free import of yarn.

“Government should allow import of 32 single yarn and below without any duties and taxes,” said textile exporter Jawed Bilwani.

Cotton prices in Sindh remained at Rs8,600 to Rs10,200 per maund. Lint fetched Rs9,800 to Rs10,500 per maund in Punjab and Rs9,500 to Rs9,700 per maund in Balochistan. Karachi Cotton Association’s spot rate committee increased the spot rate by Rs300 per maund to Rs10,100 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman said international market saw an increase in the prices during the outgoing week. New York Cotton market futures recorded rates at 70 to 71 cents per pound. Pakistan remained the biggest buyer with purchase of 93,000 bales during the week.

Prices remained stable in Brazil and Argentina while rates increased in India. Traders said prices in the local market would either increase or remain stable, taking cue from increase in the New York cotton market.

There is a little chance of prices coming down. One trader said prices of cotton are increasing, which would have negative impact over the local textile industry. Private sector has shown interest in growth of cotton in the country.

Textile businessman Gohar Ejaz said the government created a ‘cotton task force’, which would take measures to increase cotton production in the country. Five textile mill owners were included in the task force and they are involved in efforts to increase cotton production. They will coordinate and cooperate with growers, scientists, researchers and other stakeholders. The task force has started its work. They will visit cotton growing countries to seek help of experts and agriculture scientists, Ejaz said.

Cotton demand rebounded in August after easing of lockdown. Pakistan was one of the countries receiving increasing number of production orders from foreign clients after coronavirus-associated lockdown since late March.

Government circles expected 11 million cotton bales this year, while private sector expected 8.7 million bales. Since 2010, cotton cultivation area has declined by 20 percent in the country, while corn and sugarcane production have increased instead of cotton. Cotton production decreased approximately 35 percent to 6.2 million bales in 2019/20 from 9.6 million bales in 2009/10. Cotton cultivation area per million hectare decreased by approximately 18.3 percent.

Cotton yield decreased approximately 21 percent to 551 per kg / hectare in 2019/20 from 697 per kg / hectare in 2009/10 due to supply of sub-standard cotton seeds to farmers which caused colossal losses.