Cotton Exports, Rain Forecast, Tubewell Solarisation, Refineries Upgrade, Fertilizer Import, Ukraine NATO Bid, De-Dollarization & China

TOPLINE

• Pakistan's cotton exports have started strong, with a major cotton ginner finalizing agreements to export 600 tonnes to Indonesia and Vietnam. Pakistan is projected to produce over 1 crore bales of cotton this year.
• The PMD has forecasted monsoon rains in various parts of the country from July 13 to July 17, with intermittent breaks. Riverine areas in Punjab are on high alert as India released more water into the Sutlej river, posing a flood threat.
• The ECNEC has approved the National Programme for Solarisation of Agriculture Tube-wells in four provinces of Pakistan. The project, costing Rs 377.236 billion, will be implemented over a period of 3 years.
• Pakistan Refinery Limited (PRL) is planning to invest $5 billion in upgrading its existing refineries, aiming to establish 5 deep conversion refineries with a combined capacity of refining approximately 350,000 barrels per day of crude oil.
• Rs 8.08 billion was the import value of fertilizer in May 2023, down 37.4% compared to Rs 12.9 billion in May 2022.
• During the NATO summit in Vilnius, member nations pledged to invite Ukraine to join the alliance once certain conditions are met and the allies reach an agreement.
• According to S&P Global's chief economist, the dominance of the US dollar as the global currency is weakening. The trend of circumventing the dollar, such as the rise in trade conducted in China's yuan and the availability of cheap financing from China-led development banks has led to this trend. Chinese President Xi emphasized the need for openness in China's economy, with a focus on foreign cooperation.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Pakistan's Cotton Exports: Pakistan's cotton exports have started strong, with a major cotton ginner finalizing agreements to export 600 tonnes to Indonesia and Vietnam. Favorable weather conditions have improved cotton quality, attracting early orders and raising expectations for a successful year. However, delayed cotton procurement has driven prices up, reaching Rs 17,500 per maund in Punjab. The country is projected to produce over 1 crore bales of cotton, which bodes well for Pakistan's textile sector. [ET] [ProPakistani]
• Cotton Market: The local cotton market remained stable on Tuesday, with satisfactory trading volume. In Sindh, the rate of new crop cotton ranged between Rs 17,000-17,100 per maund, while the rate of Phutti ranged between Rs 7,000-7,400 per 40 kg. In Punjab, the rate of cotton was between Rs 17,300-17,500 per maund, and the rate of Phutti ranged between Rs 7,300-7,900 per 40 kg. In Balochistan, the rate of cotton was Rs 17,000-17,100 per maund, and the rate of Phutti ranged between Rs 7,200-7,400 per 40 kg. [BR]
• Potential Decrease in Wheat Flour Prices: The Punjab government is considering allowing both the public and private sectors to import wheat in response to rising prices.. Market sources suggest that such an announcement could potentially lead to a decrease in flour prices. Despite the government's claim of record-high wheat production, prices have continued to rise, and analysts attribute this to traders and stockists hedging against the government's inability to import wheat. [ProPakistani]
• Cement Export: Rs 5.17 billion was the export value of cement in May 2023, up 159% compared to Rs 1.44 billion in May 2022, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Monsoon Currents & Westerly Wave: The Pakistan Meteorological Department (PMD) has forecasted additional monsoon rains in various parts of the country from July 13 to July 17, with intermittent breaks. Monsoon currents from the Arabian Sea are expected to reach the upper and central regions, intensifying on July 14. A westerly wave is also predicted to enter the upper parts on July 14. As a result of these weather systems, rain, wind, and thunderstorms with heavy downpours are anticipated in multiple areas including Kashmir, Murree, Islamabad, Lahore, Gilgit-Baltistan, Chitral, Swat, Peshawar, and several other cities from July 12 to July 17. [ET]
• Punjab on High Alert as India Releases Water: Riverine areas in Punjab are on high alert as India released more water into the Sutlej river, posing a flood threat. The Meteorological Department predicts additional monsoon rains in the coming days. India is sharing flood data with Pakistan as per the Indus Waters Treaty. The Sutlej river is currently at a medium-flood level, and water levels may rise further due to ongoing rains in India's catchment areas. [Dawn]
• Fertilizer Import: Rs 8.08 billion was the import value of fertilizer in May 2023, down 37.4% compared to Rs 12.9 billion in May 2022. [ET]
• ECNEC Approves Solarisation Program: The Executive Committee of the National Economic Council (ECNEC) has approved the "Prime Minister's National Programme for Solarisation of Agriculture Tube-wells'' in four provinces of Pakistan. The project, costing Rs 377.236 billion, will be implemented over a period of three years, with Phase-I involving an investment of Rs 90 billion for the year 2023-24, funded by the federal government, provincial governments, and beneficiary farmers. [BR] [Dawn] [ET] [AUGAF] [AN]
• Chashma-5 Nuclear Plant Deal: Pakistan has reportedly accepted a $5 billion deal for the construction of the Chashma-5 (C-5) nuclear power plant from China, with an electricity price of approximately Rs 20 per unit. This decision has led to the shelving of renewable energy projects and comes at a higher cost compared to the Thar coal projects. The project, with an earliest availability date in 2029, had estimated capital costs ranging from $4.5 billion to $5.678 billion under different energy plans. [BR]
• Violation of Competition Act by Urea Manufacturers: An inquiry committee of the Competition Commission of Pakistan (CCP) has found urea manufacturers and the Fertilizers Manufacturers of Pakistan Advisory Council (FMPAC) guilty of price fixing. The committee recommends initiating proceedings against them under the Competition Act 2010 for violating Section 4 Prohibited Agreements. The investigation was initiated based on an advertisement by FMPAC announcing a maximum retail price for urea. Urea prices were deregulated, but provincial agriculture departments still notify prices as a reference. The inquiry committee obtained price notifications from the Agriculture Department of Punjab for further examination. [Dawn]
• Pak-China to Speed up ML-1, SEZs Implementation: Pakistan and China have agreed to fast-track work on the implementation of the main line (ML-1) railway project and special economic zones (SEZs). [Dawn]
• PRL's Ambitious Refinery Upgrade: Pakistan Refinery Limited (PRL) is planning to invest $5 billion in upgrading its existing refineries, aiming to establish 5 deep conversion refineries with a combined capacity of refining approximately 350,000 barrels per day of crude oil. The Refinery Expansion and Upgrade Project (REUP) aims to modernize PRL's refining capabilities, produce cleaner fuels, and meet the increasing market demand. However, PRL emphasizes the need for a refining policy to support industry development and attract investments, advocating for a brownfield policy that enables existing refineries to undergo essential upgrades for greater benefits compared to a greenfield policy. [The News]

AGRI UPDATES & PAKISTAN POLICY

• Inter-Bank and Open Market Gains: The Pakistani rupee rebounded against the US dollar after receiving a $2 billion loan from Saudi Arabia, boosting sentiment in the currency market. The rupee strengthened 0.44%, or Rs 1.23, to Rs 278.57 against the greenback in the interbank market.? In the open market, the rupee regained 0.35% of its value, or Rs 1, at Rs 282/$, according to the Exchange Companies Association of Pakistan. This improvement also led to a decrease in gold prices by 2.15%, or Rs 4,500, at Rs 204,500 per tola (11.66 grams), an almost four-month low. Previously, the rupee had depreciated due to increased demand for US dollars for clearing import backlogs and higher rates offered by illegal currency exchange operators. [ET]
• IMF's Consideration of Pakistan's SBA: The International Monetary Fund's Executive Board is scheduled to consider Pakistan's 9-month stand-by arrangement (SBA) of $3 billion on July 12. If approved, Pakistan will receive an installment of $1.1 billion, and it is believed that the IMF has accepted the Ministry of Finance's $8.2 billion financing gap plan. However, no confirmation from the IMF's Pakistan rep has been given regarding the financing gap plan. [BR]
• KPK Govt Seeks Military Intervention: The death toll from a violent dispute in the Kurram tribal district has reached 11, prompting the Khyber Pakhtunkhwa government to request additional military and paramilitary troops to intervene. The clash between residents of Dandar Sehra and Boshehra has left over 70 people injured, with both sides using heavy weapons. The ongoing fighting has caused fear in the area, leading to road blockades and shortages of essential goods. Clashes continued in several areas on Tuesday. [Dawn] [ET]
• PM Launches Women Empowerment Programme: Prime Minister Shehbaz Sharif unveiled the Women Empowerment Programme, which is being initiated at a total cost of Rs 10.4 billion. He expressed hope for an IMF agreement and called for utilizing all resources to overcome challenges. [BR]
• Imran Khan's Summons in NCA Case: The National Accountability Bureau (NAB) in Rawalpindi has summoned Pakistan Tehreek-e-Insaf (PTI) chief Imran Khan to investigate the ￡190 million National Crime Agency (NCA) UK settlement case. Imran Khan has been requested to provide details of his assets and properties, including those? of Shaukat Khanum Trust. [The News]
• CPEC Bilateral Meeting Update: The 12th Special Joint Cooperation Committee (JCC) meeting of the China-Pakistan Economic Corridor (CPEC) was held, with the co-chairs emphasizing the importance of CPEC in strengthening the deep-rooted ties between China and Pakistan. [The News]
• Saudi Arabia's Continued Financial Aid: The Kingdom of Saudi Arabia (KSA) has provided an additional $2 billion in deposits to bolster the State Bank of Pakistan's foreign exchange reserves, ahead of an International Monetary Fund (IMF) Executive Board meeting. If the IMF grants approval in its meeting, Pakistan will receive the first tranche of $1.1 billion, bringing the total package to $6.2 billion, including $5 billion in deposits and a $1.2 billion oil facility. [Dawn] [ET] [The News]
• PAC In-Camera Meeting on Soft Loans Investigation: During an in-camera meeting of the Public Accounts Committee, resistance was encountered in investigating the beneficiaries of $3 billion soft loans through the FIA and NAB. The names of companies receiving loans were disclosed, but details of lending banks and borrowers were not provided. The loans were given to various industries at a 5% interest rate. [The News]
• Green Climate Fund for 'Recharge Pakistan' Project: The Green Climate Fund (GCF) has granted $66 million to Pakistan for a seven-year project called Recharge Pakistan. The project aims to enhance the resilience of vulnerable communities impacted by flooding and drought through ecosystem-based adaptation. It is a collaboration between the government, the World Wide Fund for Nature-Pakistan (WWF-P), and the federal flood commission. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• US Dollar's Position in Global Currency System: According to S&P Global's chief economist, the dominance of the US dollar as the global currency is weakening. Aggressive US sanctions, including freezing Russia's reserves, have prompted countries to explore alternative currencies for trade and repatriate their gold reserves. S&P's economist highlighted the growing trend of circumventing the dollar, such as the rise in trade conducted in China's yuan and the availability of cheap financing from China-led development banks. While the US dollar will remain a significant currency, it may no longer hold its dominant position. [BR] [Reuters]
• Severe Storm Hits Northeast United States: A powerful storm in the United States' Northeast, including Vermont, caused extensive flooding and disrupted communities. The National Weather Service issued flash flood warnings. The storm also impacted Connecticut and New York, resulting in flash floods, swift boat rescues, and unfortunately, one fatality. Over 13 million Americans were under flood watches and warnings across the affected areas. [Al Jazeera] [Dawn] [ET] [The Guardian] [ABC] [DNA]
• NATO's Support for Ukraine's Alliance Membership: During the NATO summit in Vilnius, member nations pledged to invite Ukraine to join the alliance once certain conditions are met and the allies reach an agreement. They also expressed the intention to eliminate bureaucratic obstacles to accelerate the process. Secretary General Jens Stoltenberg announced that Ukraine would not require a Membership Action Plan to prepare for its NATO membership. [Dawn] [Bloomberg] [Al Jazeera] [BBC] [CBS] [AP] [WP]
• President Xi Jinping Calls for Economic Openness in China: Chinese President Xi Jinping emphasized the need for greater openness in China's economy, with a focus on foreign cooperation in areas such as trade and investment. During a meeting on deepening reform, Xi stated that key areas of foreign exchange and cooperation, including investment, trade, and financial innovation, should be prioritized in building a new development pattern and promoting structural opening up. [Bloomberg] [The News]
• Oil Prices: Oil prices jumped on Tuesday, settling up about 2%, boosted by a falling U.S. dollar, hopes for higher demand in the developing world and supply cuts by the world's biggest oil exporters. Brent futures rose $1.71, or 2.2%, to settle at $79.40 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.84, or 2.5%, to settle at $74.83. [Reuters] [BR] [ET]
• Muslim States Seek Action on Quran Desecration: Muslim states, including Iran and Pakistan, have called for accountability and condemned the desecration of the holy Quran during a UN Human Rights Council debate. The motion, initiated by Pakistan, seeks a report on the issue and urges states to review their laws to prevent religious hatred. The vote on the motion is expected to pass, with support from OIC countries and others. [BR]
• Indian Legal Battle over Article 370: India's Supreme Court has set a roadmap to hear petitions challenging the abrogation of Article 370, which granted special status to India-held Kashmir. The court will conduct day-to-day hearings on the matter starting from August 2. Several petitions related to the abrogation are pending before the court. Political parties in India-held Jammu and Kashmir have welcomed the decision to prioritize the hearings. [Dawn] [ET] [Al Jazeera]

PAKISTAN - REMAINDERS

• A two-day Conference on 'Foundation Learning and Early Childhood Care and Education in Emergencies' in Karachi spoke of how children suffered most in 2022 floods’. [ET]
• Extensive powers granted to PCG, PMSA: The Pakistan Coast Guards (PCG) and Pakistan Maritime Security Agency (PMSA) have been granted extensive powers by the Federal Board of Revenue (FBR) to combat smuggling. The FBR issued three notifications, allowing the officials to search and arrest suspected smugglers without a warrant from magistrates. They can also enter premises, make arrests, and seize goods without a warrant. The notifications also empower PCG and PMSA officials to confiscate goods liable for confiscation under the Customs Act. [BR]

Opinion: Towards biogas policy - “It is not meant here to propose Biogas as a panacea. However, it has a potential to meet a significant share (20%) of the gas demand. It will also add to energy security as it is a domestic resource and is distributed throughout the country. Let’s get going.” - By Syed Akhtar Ali [BR]