Due to a decline in cotton production against the demand, cotton prices are hitting an all-time high in Pakistan. The local mills are entering into the cotton import contracts. However, as a result of a record increase in the prices in the country, a liquidity crunch is being witnessed. Local cotton prices remained firm during the outgoing week; however, the silver fibers spot rate raced to an all-time high of Rs19,000/maund (37kgs) as demand outpaced production.
Sources said one international trader was also selling lint in the local market. Two thousand cotton bales were sold at Rs19,500/maund during the last day. With quality cotton in hand, few ginners have been seen demanding Rs19,500 to Rs20,000/maund. Cotton prices in Sindh clocked in at Rs15,500/maund to Rs20,000/maund. The seed-cotton stocks have completely been sold in the province, while rates of cottonseed remained stable.
Cotton prices in Punjab remained at Rs17,000 to Rs20,000/maund, while seed-cotton was sold at Rs6,000 to Rs8,500 per 40-kg. Cotton stocks have ended in Balochistan.
The spot rate committee of the Karachi Cotton Association raised the official spot rate by Rs400/maund during the outgoing week to Rs19,000/maund, which is the highest in the history of the country. Prices in the New York Cotton Market increased to 119 cents per pound.
The trend is the same in the international market. According to the USDA’s weekly sales and export report, a sale of 400,000 bales was recorded during the week, 85% higher than the previous week. Out of these bales, China remained the largest buyer with 139,500 bales, while Pakistan was the fourth-largest buyer of the week with 38,400 bales.
Prices in Brazil, Central Asia, and India also remained stable, while mills in India did not buy any cotton owing to higher prices.
Cotton is a commodity item, and its price fluctuation significantly affects the local textile sector. The lower production in the country is raising a considerable concern in the textile sector.
Government should promote prompt actions to recover cotton production to fill the gap between demand and supply.
