MULTAN: Limited cotton stocks with ginners and acute shortage of quality lint restricted trading activity on Friday. Phutti (seed cotton) prices for advanced deals increased to Rs3,750. The Karachi Cotton Association kept its spot rate unchanged at Rs7,500.

Experts said the State Bank of Pakistan’s move to increase interest rate from 6 per cent to 6.5pc will impact cotton prices. “Lint prices will further increase as cotton trade mostly depends on bank loans,” they added.

The All Pakistan Textile Mills Association is making efforts to convince the government not to impose 9pc tax on imported cotton for deals which take place in June, industry sources said. Ginners are of the view that tax should be imposed on all deliveries after June 30 as it was being done in the past.

They said that government has less than one week’s time and chances were very limited for the acceptance of their demand.

They said that there is a relaxation from the government on cotton imports. Nine per cent tax will not be charged on cotton which will be imported from January 1 to June 30, sources added.

They said that the government has also increased duty from 3pc to 8pc on the import of all yarns except cotton yarn which will also resulted in the increase yarn and cotton prices.

They predicted that there are chances that new cotton season will start with cotton prices at Rs8,500 and phutti rates at Rs4,000.

Right now major buyers are concentrating on imports to discourage the sharp increase in local prices, however there is a small chance of this as domestic cotton production will be less from the estimated cost due to various reasons, experts said.

The following deals were reported to have changed hands on ready counter: 200 bales, Sadiqabad, at Rs7,475; 200 bales, Bahawalpur, at Rs7,500; 800 bales, Mian Channu, at Rs6,000; and 200 bales, Haroonabad, at Rs6,650.

Published in Dawn, May 26th, 2018