- Cotton prices have reached Rs 19,500-20,500/maund. The Phutti (Seed-Cotton) price decreased and reached a low level of Rs 8,800-9,800/40 kg. Intense heat has hindered cotton sowing, and Punjab has not met its sowing target. Several ginning factories are gearing up to open, with 7 operational and more expected to start after Eid.
- The federal government announced a reduction in petroleum product prices effective June 1, 2024, with petrol prices lowered by Rs 4.74 per liter to Rs 268.36 and high-speed diesel (HSD) by Rs 3.86 per liter to Rs 270.22.
- The Annual Plan Coordination Committee (APCC) approved a Rs 3 trillion National Development Plan (NAP) for 2024-25, including a federal PSDP of Rs 1.221 trillion to boost growth to 3.6%. This marks a 30% increase from the previous year, with an additional Rs 185 billion investment from power companies.
- NEPRA approved an additional Rs 46.613 billion burden on consumers of Discos and KE for the third quarter under QTA, including Rs 28.515 billion for capacity charges. This adjustment will reflect in electricity bills from July to September 2024.
- India's economy surged by 8.2% in the year to March, providing a timely boost for Prime Minister Narendra Modi ahead of national elections - which Modi is slated to win. Despite challenges like unemployment, India maintains its position as the world's fastest-growing major economy.
- OPEC+ extended deep oil output cuts until 2025 due to weak demand, high interest rates, and rising US production, despite Brent crude trading near $80/barrel. With concerns about slow demand growth in China and increased oil stocks in developed economies, OPEC+ has been cutting production by 5.86 million barrels per day since late 2022.
AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS
- Developing Pakistan’s Juice Market: In the juice market, the first problem creates health hazards as inferior and non-compliant product sales are spurring. In the formal juices market, when FED of 5% was imposed in FY19, both pulp production and juices sales dipped and moved back on the growth path after its removal the very next year. Then in FY23, the FED at 20% was imposed and this combined with GST of 18% has an effective indirect tax of 42%. That has resulted in a substantial decline in the value chain- the pulp production is almost reduced to half and juice sales are down by two-fifths. Having said that, there are exports of $15 million to thirty countries, and the potential is to increase it to $100 million in fi5ve years. Our mangoes, kinnows, and other fruits are preferred by the diaspora market. [BR]
- Sindh Plans Interest-Free Student Loans: The Sindh government is developing a system to provide interest-free loans to Sindh Agricultural University students, with additional grant support being discussed. Agriculture Minister Muhammad Bux Mahar also called for the introduction and free distribution of new crop varieties to farmers. [BR] [ET] [Samaa]
- Sindh Farmers Struggle Amid Challenges: The Sindh Abadgar Board lamented ongoing challenges faced by farmers despite their crucial contribution to the GDP. Issues like inflation in input prices, electricity shortages, and manipulated decline in commodity prices persist. Despite a minimum price set for cotton, growers received significantly lower amounts in the market. [ET]
- Cotton Prices Decline Sharply: Cotton prices initially surged but then dropped significantly by Rs 1000 to 1500 per maund, with Phutti prices also declining. The cotton price has reached Rs 19,500-20,500/maund, although only 2,000 bales of new season cotton have been prepared so far. The Phutti price has also decreased by Rs 700-800/40 kg, reaching a low level of Rs 8,800-9,800/40 kg. Despite increased Phutti arrival, intense heat has hindered cotton sowing, and Punjab has not met its sowing target. Several ginning factories are gearing up for processing, with seven partially operational and more expected to start after Eid. Textile spinners say that the current price is suitable for their needs, but overall, it is too high and unreasonable for spinners, and there is room for more reduction. Ginners should work cautiously in this situation. However, unusual heat in several cotton-producing areas of Punjab is causing difficulties in cotton sowing. If this situation persists, there is a fear of the sowing being affected. Nevertheless, sowing is expected to continue for a few more weeks. [BR]
- WTO Regulations & Wheat Imports: Wheat imports, like other agricultural products, are governed by WTO's Sanitary and Phyto-Sanitary (SPS) measures, focusing on quarantine and biosecurity to safeguard human, animal, and plant health. Compliance with these regulations is vital, requiring cooperation between importing and exporting countries. [ET]
- PHA Cultivates Korean Grass: The Parks and Horticulture Authority (PHA) is cultivating Korean grass in-house to reduce reliance on government funds. Director General Muhammad Tahir Wattoo mentioned the project near Shahdara, highlighting Korean grass's low maintenance needs and its ability to improve air quality by absorbing carbon dioxide, dust, and dirt. [ET]
- Spices Import: Rs 5.2 billion was the import value of spices in April 2024, up 59.5% compared to Rs 3.3 billion in April 2023. [ET]
- Edible Oil-Rich Seeds Export: Rs 1.49 billion was the export value of oilseeds, nuts and kernels in April 2024, down 65.71% compared to Rs 4.35 billion in April 2023, according to the Pakistan Bureau of Statistics. [ET]
ENERGY - WEATHER, WATER & POWER
- Monsoon Fears in Sindh Amid Climate Change: The Pakistan Meteorological Department predicts increased monsoon rains in southern Sindh, including Hyderabad, from June to September. Shaikhani urged the release of funds for approved system improvement projects. In Karachi, monsoon season raises fears of flooding and power outages, with climate change worsening the intensity and duration of rains. [BR] [ET]
- Government Reduces Petroleum Prices: The federal government announced a reduction in petroleum product prices effective June 1, 2024, with petrol prices lowered by Rs 4.74 per liter to Rs. 268.36 and high-speed diesel (HSD) by Rs 3.86 per liter to Rs. 270.22. This decision follows OGRA's recommendation, with the import premium on petrol decreasing by 7% to $9.70 per barrel, while the HSD premium remains stable at $6.50 per barrel. [BR]
- Finance Allocates Power Subsidies: The Ministry of Finance has allocated Rs 681 billion for power tariff-related subsidies for FY 2024-25, with no supplementary budgets allowed. The total subsidy for the power sector will be Rs 1.094 trillion, which is below the Power Division's request of Rs 1.250 trillion. [BR]
- Commerce Pushes Competitive Electricity Tariff: The Ministry of Commerce is seeking a regionally competitive electricity tariff in the FY25 budget to signal Pakistan's commitment to international buyers. This aligns with policies aiming to provide export sectors with tariffs of US cents 7.5 to 9 per kWh, reducing manufacturing costs and enhancing international competitiveness. [BR]
- Kuwait Funds Mohmand Dam: Pakistan and Kuwait will sign a $25 million loan agreement on June 3, 2024, for the Mohmand Dam. Kuwait is also considering financing the Kachhi Canal project, discussed during the 5th Session of the Pakistan-Kuwait Joint Ministerial Commission from May 28-30, 2024. [BR]
- OGRA Cuts LPG Prices: Ogra reduced both commercial and domestic LPG cylinder prices by Rs 3.86 per kg, effective June 1, 2024. The per kg price decreased to Rs 234.60 from Rs 238.46, with domestic 11.8kg cylinder prices dropping by Rs 45.62 to Rs 2,768.23 for June, down from Rs 2,813.85 in May. [BR]
- NEPRA Approves QTA Burden: Nepra approved an additional Rs 46.613 billion burden on consumers of Discos and KE for the third quarter under QTA, including Rs 28.515 billion for capacity charges. This adjustment will reflect in electricity bills from July to September 2024, with the Power Division urging immediate notification due to tariff rebasing. [BR]
- KPCL Requests Nepra Indexation: KPCL seeks Nepra's nod for indexation in Q1 and Q2 2024 due to Rs 20 billion invoicing issues and a $100 million debt payment due in October 2024. CEO Liu Yonggang noted that KPCL achieved COD on June 29, 2029, and submitted a tariff adjustment request on September 30, 2022. [BR]
- Shehbaz Seeks Chinese Investment: Prime Minister Shehbaz Sharif may seek Chinese investment for the power generation aspect of the 4,500 MW Diamer Bhasha Dam Project (DBDP) due to borrowing constraints. The DBDP aims to enhance energy sector viability, reduce carbon emissions, address water scarcity, boost irrigation, ensure food security, and drive economic and social development in Pakistan. [BR]
- Solar Energy Boosts Pakistan: Investing in solar energy fosters sustainable development and improves life quality in Pakistan, said Mian Faraz Shafiq Alam of Alam Energy. He urged immediate action and support for small to medium-sized solar farms to enhance energy self-sufficiency. [BR]
PAKISTAN - ECONOMICS, POLITICS & SECURITY
- Shehbaz Delays Tax Hike Proposal: Prime Minister Shehbaz Sharif has postponed a proposal to increase income tax for salaried individuals to counter the IMF's condition. He instructed the finance ministry to request dropping the proposal, aiming to ease the tax burden. Additionally, Pakistan plans to prepare the new budget at an exchange rate of Rs 295 to a dollar, ignoring the IMF's projected currency depreciation. [ET] [ET]
- FBR Overhauls IT with WB Loan: The FBR will revamp its IT infrastructure, establish new data centers, and introduce an automated income tax refund system with a $25 million loan from the World Bank. This follows a petition against the FBR's delay in implementing tax refund laws, with assurances from the FBR to adhere to recommendations. [BR]
- Record Budget Allocation for Infrastructure: The government allocated a record Rs 1.22 trillion for the federal Public Sector Development Programme (PSDP) in the next budget, with 59% earmarked for infrastructure schemes. This aligns with constitutional requirements and focuses on prioritizing energy sector projects, receiving 31% of the budget. Discretionary spending by parliamentarians will be abolished. The APCC approved a Rs 1,221 billion federal PSDP and set a 3.6% growth target for the next fiscal year, contingent on political stability and economic factors. The meeting set sector-specific growth targets of 2% for agriculture, 4.4% for industry, and 4.1% for services. [ET] [BR]
- FTO Recommends Tax Reforms: The FTO proposed tax policy changes for the Finance Bill 2024 to aid exporters, real estate, and startups, aiming to simplify procedures and raise income tax thresholds. The FTO highlighted obstacles like negative taxation and high stamp duties in the real estate sector. These proposals are under FBR review for potential inclusion in the 2024-25 federal budget. [BR]
- APCC Greenlights Rs 3 Trillion NAP: The APCC approved a Rs 3 trillion National Development Plan (NAP) for 2024-25, including a federal PSDP of Rs 1.221 trillion to boost growth to 3.6%. This marks a 30% increase from the previous year, with an additional Rs 185 billion investment from power companies, totaling federal development spending to Rs 1.406 trillion. [Dawn]
INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT
- Chile Backs South Africa Against Israel: Chilean President Gabriel Boric announced that Chile would support South Africa's case against Israel at the International Court of Justice, accusing Israel of "genocide" in its conflict with Hamas. Boric highlighted the dire humanitarian situation in Gaza and called for a strong international response. [BR] [BR]
- Trump Conviction: Donald Trump stated he would be willing to accept home confinement or jail time following his recent conviction by a New York jury but expressed concern about public acceptance. In an interview with Fox News, he suggested it would be challenging for the public to endure, without specifying potential consequences if such a breaking point were reached. [BR]
- India's Economy Surges: India's economy surged by 8.2% in the year to March, providing a timely boost for Prime Minister Narendra Modi ahead of national elections. Despite challenges like unemployment, India maintains its position as the world's fastest-growing major economy, driven by strong demand and government infrastructure spending. [BR]
- Sri Lanka Monsoon Tragedy: 14 Dead - At least 14 people have died in Sri Lanka due to flash floods, mudslides, and falling trees amidst monsoon storms, as reported by the country's disaster center on Sunday. Among the victims were three members of the same family who drowned near the capital, Colombo, on Sunday. [SCMP] [ET]
- Kejriwal Vows Anti-"Dictatorship" Fight: Arvind Kejriwal, a key opponent of Indian Prime Minister Narendra Modi, vowed to continue fighting against what he perceives as "dictatorship" before returning to jail. His arrest, labeled a "political conspiracy" by colleagues, occurred just before the general elections, amid expectations of another significant victory for Modi's BJP. [BR]
- ANC Loses Parliamentary Majority: The African National Congress (ANC) has lost its parliamentary majority in a historic election result in South Africa, marking a significant political shift since the end of apartheid. With over 99 percent of votes counted, the ANC received nearly 40 percent, falling short of the majority it held since the 1994 all-race vote. [Al Jazeera]
- US Gasoline Demand Softens: US gasoline demand is weakening at the start of the summer driving season, contrasting with usual trends and clouding future oil demand ahead of the OPEC+ meeting. Despite refiners operating at their highest rate in nine months, gasoline inventories surged, pushing futures prices to a three-month low. [ET]
- OPEC+ Extends Oil Output Cuts: OPEC+ extended deep oil output cuts until 2025 due to weak demand, high interest rates, and rising US production, despite Brent crude trading near $80/barrel. With concerns about slow demand growth in China and increased oil stocks in developed economies, OPEC+ has been cutting production by 5.86 million barrels per day since late 2022, amounting to about 5.7% of global demand. [BR]
- Mobile Phones Import: Rs 44.9 billion was the import value of mobile phones in April 2024, up 1,388% compared to Rs 3.02 billion in April 2023. [ET]
- Electric Fans Export: Rs 1.04 billion was the export value of electric fans in April 2024, down 78.20% compared to Rs 1.27 billion in April 2023, according to the PBS. [ET]
- Rawalpindi Bans Use of Polythene Bags. [ET]
- Papara Acquires SadaPay: Turkish fintech Unicorn Papara has fully acquired Pakistani digital payment platform SadaPay. SadaPay stakeholders will receive shares in Papara, with the acquisition unanimously approved. [ET]
- Shehbaz Seeks Chinese Business: Prime Minister Shehbaz Sharif will visit China on June 4 for 5 days, focusing on Shenzhen, known for its tech prowess and robust economic growth. Chinese Ambassador to Pakistan Jiang Zaidong stated that Prime Minister Shehbaz Sharif’s upcoming visit to China will significantly boost strategic cooperation between the two nations. [ET] [BR]
- Opinion: Tough Measures Loom - “The International Monetary Fund (IMF)’s team has done its homework and provided certain policy prescriptions for the government. On June 7th, banker-turned-economic czar Muhammad Aurangzeb will deliver the first speech of the coalition government headed by Prime Minister Shehbaz Sharif. While political parties not part of the cabinet may not support the tough budgetary measures to be announced, Pakistan has little or no choice but to start working from year one.” - By A. A. H. Soomro [ET]
- Opinion: Dangers of Global Warming - “Global warming can have a direct physical impact on flying as really high heat can cause delays because a plane in high temperatures needs more time and more distance to take off to fight gravity. It is not just flying but other modes of transportation that will also be affected by climate change. According to a study, the design of most transportation infrastructure in the world was based on the climate of the mid-20th century. As climate change continues to warm the planet and make weather more extreme, much of that infrastructure will become less safe and reliable.” - By Zia Ul Islam Zuberi [BR]
