Pakistan’s cotton sector has been jolted by an unprecedented disruption: for the first time in 52 years, the Karachi Cotton Association (KCA) failed to issue its daily cotton spot rate. The lapse has rippled through the market, unsettling bank financing, insurance valuation and Pakistan’s visibility in global cotton price reporting.
The trigger was administrative, not market-driven. On Friday, the Federal Investigation Agency and the Evacuee Trust Property Board declared the historic KCA/Cotton Exchange building—established in 1933—as federal government property and sealed it. More than 320 cotton brokers, traders, importers and representatives of major textile groups were ordered to vacate immediately, paralysing the association’s operations.
Since 1935, the KCA’s daily spot rate has functioned as the backbone of Pakistan’s organised cotton trade. It underpins domestic transactions, collateral valuation for bank lending, insurance assessments and the country’s daily representation in international cotton markets. With the rate absent, banks are struggling to extend credit against pledged cotton stocks, while insurers face uncertainty in valuing inventories in the event of losses.
Industry veterans note that the only comparable disruption occurred briefly in 1973, during the nationalisation of cotton-related institutions. Otherwise, the benchmark has been issued without interruption for decades.
Beyond immediate financing bottlenecks, the episode carries reputational risk. Pakistan’s disappearance from daily global cotton price data weakens market confidence at a time when the country’s cotton economy is already grappling with declining production and rising import dependence.
The incident highlights a deeper problem: critical market institutions remain vulnerable to abrupt administrative action. Restoring the spot rate quickly is essential. But unless governance of such keystone institutions is stabilised, Pakistan’s cotton market will remain exposed—its credibility hostage to events far removed from supply and demand.
