Weekly Cotton Reviews: Prices decline amid low trading volumes

KARACHI: Cotton prices have witnessed a decline, while New York cotton prices have shown an upward trend. Trading volumes remain limited. Approximately 40% of the country’s textile mills have already been shut down, and cotton production has decreased by over 50% in the past decade, according to the All Pakistan Textile Mills Association (APTMA).

The country is expected to import cotton worth $2 billion this year. The significant decline in cotton production is largely attributed to mushroom growth of sugar mills, particularly those located in Punjab.

Attacks of worms and flies have also affected cotton cultivation. However, due to the efforts of the Punjab Agriculture Department, the cotton crop in the province has been saved from the pink bollworm and other hazardous pests.

Modest business on cotton market

According to the sources in Punjab there has been a decline of nine lac and thirty one thousand acres in the area under cotton cultivation.

The local cotton market witnessed a decline in cotton prices during the past week. The relatively lower cotton prices in countries such as the US and Brazil have led textile spinners to show greater interest in imported cotton. On the other hand, the quality of local cotton is also deteriorating day by day. Furthermore, imported cotton is exempt from taxes, whereas local cotton is subject to an 18% sales tax. This disparity in taxation is making imported cotton a more attractive option for textile spinners, adding to the woes of the local cotton industry.

The quality of local cotton is falling, which is being seen as an indication of a declining crop. Meanwhile, the problems plaguing the textile sector remain unresolved, with no significant progress yet in sight. Furthermore, the financial crisis is intensifying, posing additional challenges for local spinners.

The import of cotton yarn in large quantities is also exacerbating the situation, and to make matters worse; this import is also exempt from sales tax. This has created an uneven playing field for domestic cotton producers and spinners, who are already struggling to compete with cheaper imports.

The figures, released by Pakistan Cotton Ginners Association, show that by 15 November 2024, cotton arrivals totalled only 4,893,948 bales, reflecting a sharp 33.61% decrease from the 7,370,624 bales recorded on the same date in 2023.

The cotton production is expected to be around sixty to sixty five lac bales.

The rate of cotton in Sindh as per quality is in between Rs 16,209 to Rs 17,500 per maund. The rate of Phutti is in between Rs 6,000 to Rs 8,500 per 40 kg.

The rate of cotton in Punjab is in between Rs 17,200 to Rs 17,500 per maund. The rate of Phutti is in between Rs 7,000 to Rs 9,000 per 40 kg.

The rate of cotton in Balochistan is in between Rs 17,200 to Rs 18,500 per maund. The rate of Phutti is in between Rs 7,400 to Rs 9,200 per 40 kg.

The rate of Balochi Cotton is Rs 18,500 per maund while the rate of Primark cotton is Rs 18,800 per maund.

The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 300 per maund and closed it at Rs 18,800 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman has said that international cotton market prices have seen an increase. The price of New York cotton for December delivery was in between 70 and 71 cents per pound.

According to the USDA’s weekly export and sales report, for the year 2024-2025, a total of three lac and eighteen thousand and five hundred bales were sold.

Vietnam is at top with one lac and forty one thousand and six hundred bales, followed by Pakistan with fifty five thousand and three hundred bales, and Turkiye is on number third with twenty three thousand and two hundred bales.

For the year 2025-2026, sixteen thousand bales were sold, with Turkiye topping the list with nine thousand and seven hundred bales, followed by El Salvador with five thousand and three hundred bales.

Pakistan’s domestic cotton production is failing to meet the country’s needs. Factory owners are shutting down their factories in Pakistan and setting up textile units in Bangladesh instead. Cotton farmers in Pakistan are not receiving fair prices and facilities, resulting in a significant decline in production, with only around fifty lac cotton bales produced this year.

Every year, the production is decreasing, and the country is forced to import cotton to meet its needs. According to APTMA Chairman Kamran Arshad, Pakistan’s textile industry relies heavily on imported cotton. The industry requires around one Crore cotton bales annually, but the production is only around seventy to ninety lac-9 bales. This year’s production has been even lower.

The difference in production is being met through imports, as there is no other solution. Pakistan’s cotton production has been declining every year for many years. In 2012, the production was one Crore thirty five lac bales, which was more than the country’s total requirement. However, over the past decade, the production has decreased by fifty percent instead of increasing.

Pakistan’s textile industry lacks the facilities and incentives that are available in other countries. The main reasons for the decline of the textile industry are expensive electricity, gas shortages, high interest rates, and lack of policy continuity. Electricity and gas rates should be made at par with the global rates. However, the electricity available in Pakistan is the most expensive in the world, costing around 15 cents per unit, whereas Bangladesh, India, and China offer electricity at 9 cents per unit. In such a scenario, Pakistan cannot compete with other countries, and it has become almost impossible for our industry to operate. This is why 125 textile mills have already been closed down this year, and more will shut down next year. In 2020, the electricity price was fixed at 9 cents per unit, which enabled the Pakistani textile industry to operate at full capacity, making us one of the leading countries in exporting textile products worldwide.

The significant decline in cotton production is largely attributed to the sugar mills in Punjab. Most of these sugar mills are located in districts where cotton was previously cultivated, but after their establishment, cotton cultivation has decreased, and sugarcane cultivation increased in these traditional cotton belt areas.

However, this trend has further shifted, and in the past year, a significant increase in the cultivation of maize and rice has been recorded in these districts, replacing cotton and sugarcane. As a result, Punjab has witnessed a decline of nine lac and thirty one thousand acres in the area under cotton cultivation and over three lac and forty one thousand acres in sugarcane cultivation within a year.

In contrast, the area under rice cultivation has increased by ten lac acres, and maize cultivation has increased by one lac and ninety five thousand acres. This shift has led to an increase in smog intensity on one hand, and on the other hand, the textile industry is facing a shortage of raw materials due to the increased cultivation of other crops in districts specifically allocated for cotton production.

Another significant reason for the decline in cotton production is the weakness of the research sector in this regard. The Pakistan Central Cotton Committee has been functioning since 1948. Under this institution, Cotton Research Institutes are established in Multan, Sakrand, and Karachi, while research stations are set up in Bahawalpur, Ghotki, Sahiwal, Sibi, Dera Ismail Khan, Lasbela, and Mirpurkhas.

Despite this, the institution has failed to achieve significant success in increasing cotton production and quality or protecting the cotton crop from the effects of climate change.

Thanks to the efforts of the Agriculture Department in Punjab, it has been possible to protect the cotton crop from hazardous pests, including the pink bollworm. According to Israr Rashid, Assistant Director of the Plant Protection, Pest Warning, and Quality Control of Pesticides, Agriculture Department Faisalabad, research worldwide has proven that integrated and interlinked strategies in the agricultural sector yield the best results. Therefore, if solid planning is done for the future in this world of research and exploration, achieving difficult goals also becomes possible. Furthermore, to achieve further increases in cotton yield per acre and to obtain the best price in the future, it is essential to develop a comprehensive plan of action. In light of the recommendations of researchers, the Agriculture Department has formulated a comprehensive strategy to achieve better yields for the upcoming cotton crop, known as off-season management.

However, off-season management is crucial after the last picking of cotton, and this year’s off-season management has yielded excellent results. Cotton plays a vital role in Pakistan’s agriculture and economy, with around 80% of the country’s total cotton production coming from Punjab.

To achieve better cotton yields, various factors and stages are crucial. For instance, during the winter season, effective strategies can be employed to protect future cotton crops from pink bollworm damage. This pest typically enters a dormant state in November and spends the winter on seeds, stubble, and leftover cotton balls, as well as in the waste of ginning factories.

The emergence of pink bollworms from hibernation depends largely on temperature, and as soon as the suitable temperature is available, the worms start to emerge, causing damage to the crop. He advised farmers to adopt the following strategies during the winter season to protect the upcoming cotton crop from pink bollworm damage.

After completing the picking, farmers should thoroughly remove small and affected cotton bolls, then spread them in the sun, and after they are fully dried, separate the lint and burn the remaining material. Similarly, farmers should let sheep and goats graze in the fields after the last picking, so that the raw cotton bolls can be consumed by the animals, leading to the elimination of pink bollworm larvae.

It is advised that in fields where the cotton crop has been attacked by pink bollworms, the fallen cotton bolls should be destroyed after picking to kill any remaining worms in the leftover material.

Copyright Business Recorder, 2024