Subdued business on cotton market

Trade activity came down on the local cotton market on Saturday as ginners refrained from big deals on fears of shortfall in cotton production, dealers said. The official spot rate was unchanged at Rs 8,800, they added. Prices of seed cotton in Sindh were at Rs 3000-4100, in the Punjab seed cotton prices were at Rs 3600-4200 and in Balochistan, rates of seed cotton were at Rs 3600-4250, they said.

In the ready session, over 3,000 bales of cotton changed hands between Rs 8700-9100, they said. According to the market sources, the mills could not make big deals as the ginners were not ready to oblige them due to rising fears of decline in cotton arrivals.

Cotton analyst, Naseem Usman said that the mills were trying to pay higher rates of fine quality to replenish their stock but the ginners showed reluctance in fresh selling. According to reports, Pakistan has to import over 4 million cotton bales that would cost around $1.5 billion, owing to declining production of cotton this season. This factor would push the payment bill also higher because of dollar's rise versus the rupee.

They said that imports of such a large quantity would not only increase the country's import bill, but also the cost of production. Currently customs duty, additional custom duty and sales tax have been imposed at 3 percent, 1 percent and 5 percent respectively on the import of cotton.

Pakistan produced around 10 million bales of cotton on average for the last several years against consumption of over 14 million bales, they added. Rates of cotton were almost mixed in the global markets, they said.

The following deals reported: 400 bales of cotton from Ghotki at Rs 9100, same figure from Khanpur Mehar at the same rate, 1400 bales from Rahim Yar Khan at Rs 9000, 400 bales from Liaquatpur at the same rate and 600 bales from Mianwali at Rs 8700, they said, they said.