There is welcome news for spinners in Pakistan as global cotton rates have declined sharply in one month. The average cotton index comprising all major cotton exporting countries dropped by 17.6 percent between Sept 08 and October 10.
The prices continue to decline and the average A-Index breached the $1 barrier in the global cotton market. It is worth mentioning that the United States and Brazil are the eligible markets from which Pakistanis buy. The Indian cotton market is out of bound for our spinners due to government restrictions on trade with India. Chinese market their crop in their home market only.
The average cotton index stood at 120 US cents on September 08, 2022. It came down to 102 US cents per pound. This A-index is arrived at after factoring in the rates of cotton per pound in US cents in the United States, China, India, and Brazil. On Sept 08, 2022, the rate of per pound was 109.1 cent in the US, 103 cents in China, 140.6 cents in India, and 122.8 cents in Brazil. The prices declined sharply in the next four weeks as on October 10, 2022, the prices declined to 89.1 cent in the US depicting a dip of over 20 percent. The prices declined to 98.2 cents per pound -a decline of 4.8 percent. The sharpest decrease was witnessed in India where the prices slipped to 110.8 cents per pound -a decline of 29.9 percent. The rates of Brazilian cotton slipped to 101.4 percent -a decline of 21.4 percent.
The prices are further easing, and some Pakistani spinners have opened letter of credits at $1 per pound from the US and Brazil. The landed cost of US cotton would be at par with Indian cotton at current cotton prices prevailing in the two countries. It is because freight charges from the Us are much higher than transportation charges of Indian cotton to Pakistan. Due to bad crops Pakistan must import the commodity to feed its spinning industry.
