KARACHI: Trade turnover of cotton remained low as majority of middlemen have exited from the trading arena after the Federal Board of Revenue imposed two percent sales tax on the commodity in recent past, a broker said on Wednesday.
“The imposition of two percent sales tax on cotton has pushed majority of middlemen out of markets. The situation continued to keep trade turnover of the commodity low in Pakistan.” Lal Kumar, a broker at the Karachi Cotton Exchange (KCE) said.
According to the Karachi Cotton Exchange (KCE), traders exchanged 4,800 bales (of 155 kilograms each) at Rs6,600 to Rs7,000 per maund (37.324 kilograms).
A day ago, traders exchanged mere 4,000 bales at Rs5,850 to Rs7,000 per maund.
The Karachi Cotton Exchange maintained its cotton spot rate unchanged for the 12 consecutive day at Rs6,900 per maund.
The broker said that big spinning mills have already built cotton stocks to keep their mills running and that’s why they were absent from markets since imposition of the sales tax.
However, small millers were still buying cotton according to their needs.
Sadiqabad witnessed highest trade of 1,400 bales at Rs7,000 per maund followed by Rohri, which traded 1,200 bales at Rs6,750 per maund, KCE reported.
Ali Pur traded 800 bales at Rs6,750 to Rs7,000 per maund; Haroonabad traded 600 bales at Rs6,950 per maund; Faqir Wali traded 400 bales at Rs6,600 per maund; and Ghotki and Gojra traded 200 bales each at Rs6,700 to Rs6,800 per maund, it added.
On Wednesday, Pakistan Cotton Ginners’ Association reported a decline of 1.78 million bales (or 12 percent) to 12.88 million bales’ production during the period from July 1, 2012 to March 31, 2013 against 14.67 million bales produced in the same period last year.
“On the contrary, trade at international markets remained as usual with its prices going up,” the broker added.
At the New York cotton market, the May future contract increased by 1.48 cents per pound to 88.87 cents, while July future contract surged by 1.50 cents per pound to 90.34 cents, Karachi Cotton Exchange reported. The China Cotton Index improved by three points to 19,383 points.