The rate of cotton increased by Rs300 per maund due to increase in buying by the textile sector. The drastic decrease in cotton production effects all the businesses related to cotton. There is severe financial crunch in markets due to the imposition of sales tax by Federal Board of Revenue.
In the local cotton market during the last week the rate of cotton as well as the trading volume increased after the increase in buying by the textile and spinning mills and due to the increase of supply of Phutti. The rate of good quality increased from Rs100 to Rs300 per maund. The rate of Phutti also increased.
The rate of cotton in Sindh as per quality is in between Rs7800 to Rs9150 per maund while the rate of Phutti is in between Rs3000 to Rs4400 per 40kg. The rate of cotton in Punjab is in between Rs8750 to Rs9150 while the rate of Phutti is in between Rs3800 to Rs4400 per maund. The increasing trend was witnessed in the prices of Khal, Banola and oil in both Sindh and Punjab. In Balochistan the rate of cotton is in between Rs8750 to Rs9300 per maund while the rate of Phutti is in between Rs4200 to Rs4700 per 40kg.
The Spot Rate Committee of Karachi Cotton Association has increased the spot rate by Rs150 per maund and closed it at Rs8950 per maund.
Due to low cotton production big textile mills are fulfilling their demands by signing import agreements from foreign countries. This year textile mills are facing financial crunch due to increase in the cost of production because the banks has increased the interest rate and 10percent sales tax on cotton and 7percent on cotton yarn has imposed. The Federal Board of Revenue is not fulfilling its promise and delaying the payments of sales tax refund. The financial crunch will likely to be increase in coming days. Due to delay in the payment of sales tax refund by FBR textile spinners will not be able to stock the cotton for long time. In the same way ginners will hesitate to stock the cotton because of the fear of the increase in cost.
According to the weekly report of USDA the export of American cotton increased by 9percent as compared to last week while due to the news of decrease in tension of America and China trade conflict the rate of New York cotton increased and the Rate of Promise (Waday Ka Bhao) crossed 65 American cent per pound. This time also Pakistan remains the second largest importer of American cotton while the China had not imported cotton from America.
According to the estimates released by Pakistan Cotton Ginners Association 44 lac 40 thousands (4,440,000) bales were produced in the country till October 15 which is 16 lac bales (about 26 .54percent) less as compared to last year which is critical.