Cotton hits 11-year high of Rs11,700

KARACHI: Massive fall in cotton production pushed spot rates to an 11-year high of Rs11,700 per maund in the domestic market, the Karachi Cotton Association said on Wednesday.

The sudden rise in demand in the intentional market increased the US cotton price by 12-15 cents per pound within fifteen days.

Brokers said cotton from Balochistan as well as bales imported from Afghanistan are being sold at Rs13,000 per maund.

Over the last ten years, the cotton crop has seen a sharp decline in production, yield and area of cultivation.

The Pakistan Cotton Ginners Association in its latest report up to Feb 15 said the production fell to $5.617 million bales this year compared to 8.547m recorded in the same period of last year, a decline of 34.29 per cent.

Brokers said the arrival of cotton from ginners has already ended for this year. “This means cotton prices could further increase in the domestic market while imports will see a sharp rise,” said Chairman of the Karachi Cotton Brokers Forum Nasim Usman.

Spinners may face more difficulties as the prices of US cotton have gone up during the last couple of weeks. Importers said US cotton price increased by 10 cents per pound has pushed up the prices from 84 cents to 94 cents per pound.

The higher prices of cotton in the country have increased the cost of yarn used by the value-added industry.

Yarn producers (spinners) found the growing situation against their business since the value-added industry has been demanding that imports from India are allowed.

Cotton production in India remained intact like the previous year and prices are relatively lower than in Pakistan. Yarn prices in India are also less than Pakistan.

Spinners claim that enough cotton yarn is available in the domestic market while the value-added industry said that yarn is being kept to increase the demand resulting in higher yarn prices.

Meanwhile, Senior Vice Chairman of Aptma Zahid Mazhar rejected the statements appearing in the media from Pakistan Hosiery Manufacturers Association and Pakistan Textile Exporters Association regarding yarn shortage in the country and their proposal of allowing imports from India.

He said that during the period from July to Dec 2020 as per the data released by the Pakistan Bureau of Statistics total production of cotton yarn was 1.715m tonnes compared to the corresponding period of last year when 1.714m tonnes were produced in the country.

Out of the total yarn production, only 10pc was exported in the first half of the current financial year whereas 90pc was available for the downstream industry.

Domestic downstream industry consumes only about 70pc and the balance 20pc remains as surplus.

He said that the higher yarn prices are mainly due to the increase in cotton prices to Rs12,000 per maund. The price of imported cotton has also risen to 95 cents per pound which is equivalent to Rs12,000 per maund.

“As the spinners are procuring expensive cotton this year from domestic and the international markets, therefore the cost of yarn manufacturing is also higher than that of the previous year,” he said.