Page 16 - TEXtalks International October/November 2022

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Cotton prices become volatile

like never before in history

The textile sector has rarely seen such volatility in Last week, the US Department of Agriculture
cotton rates in history as this year. The cotton prices lowered its global cotton output estimates to 1.6
peaked globally at $1.22 per kg on August 29, 2022, million bales. The cotton consumption is forecast at
and came down to 85 US cents three months later 115 million bales, mainly due to a decline in mill use
on November 18, 2022. in Pakistan and Bangladesh. On August 29, the
cotton rate was $1.22 per kg; on November 18, it
The cotton rates in Pakistan crossed Rs24000 per was 85 US cents. The crop estimates in India have
40 kg in August '22 and reached 18500 in been revised upwards to 34.2 million bales, though
November. This fluctuation in cotton rates locally still lower than last year's harvest of over 36 million
and globally has upset the economics of spinning bales. The abnormal price fluctuations in cotton
mills. Those stocked or imported cotton at peak prices have placed the spinners' world in a
rates cannot recover their cost when the mills buying tight position.
cotton at lower rates sell at lower prices. These mills
could not afford to buy cotton at high rates and had The cotton prices increased earlier on reports of
to stop or slow down production temporarily. lower production in Pakistan and India, but the
expected shortage was overcompensated by
Pakistan's textile industry uses cotton as its primary higher-than-expected production in Brazil, Australia,
raw material. Over 70 percent of the textile products and other countries. The production in the United
in Pakistan are produced from cotton. Unfortunately, States even increased after initial reports of lower
cotton production in Pakistan suffered badly from cotton output. The China factor also played an
the floods this year. According to the latest data important role in the decline in prices. The Chinese
released by the Pakistan Cotton Ginners had stocked enough cotton to stop its cotton
Association, cotton arrivals declined by 41 percent. purchases from the rest of the world, and they may
The association attributed the decline to flash floods step in now that the prices have sobered.
that particularly impacted agricultural farms in Sindh
and Balochistan. These figures are up to the However, if the prices remained lower, it would divert
beginning of November. The farmers usually sow cotton farmers worldwide to other crops in 2023-24.
wheat on their cotton farms in November. However, The input costs like fertilizer, pesticides, and seeds
because of the shortage in the market and better have also increased in the last year with high energy
prices, the farmers are waiting for the next flowering costs. Selling cotton below $1 per kg would not be
that could add to cotton production. possible for them.

October/November 2022