Record cotton rate sends buyers into frenzy

LAHORE: An all-time high rate of white lint in the Karachi cotton market traumatised the buyers, particularly textile spinners, on Wednesday when prices of the commodity crossed the Rs15,000 per maund mark.

The price hike was forced by reports that cotton futures were traded at US 113.92 cents per pound in the New York market, which was perhaps the highest rate since 2011-12 when the lint had been sold at $2.26 per pound, brokers said.

The Karachi market went into a frenzy when an international company began offering Rs15,500 per maund open bid for Balochistan cotton, said Naseem Usman, chairman of the Karachi Cotton Brokers Forum.

Yarn makers were in a fix whether to enter the market or not fearing the prices of their produce may not match the cotton rates, particularly if the commodity loses its steam in the international markets and their stockpiling for months at such a higher rate might be too risky, he said.

Mr Usman recalled that many textile millers and ginners had gone bankrupt when cotton prices touched Rs14,500 per maund a decade ago, though a few were lucky enough to benefit from the crisis.

A representative of the textile industry says the record cotton rate had put them in a quandary. “We are unable to sign new export contracts with our customers because of uncertainty in the cotton as well as currency market — the dollar-rupee disparity in the latter has also hit its historic peak,” he says, requesting not to be identified.

“As international cotton markets are also witnessing higher rates, we cannot even import the white lint.”

The highest-ever container and shipment charges are another hurdle in the present situation as each sector associated with the import or export business is feeling the heat of the rising value of dollar against Pakistani rupee, says Junaid Iqbal, a ginner.

The local cotton market is already under stress because of the recent spell of rains in Punjab’s cotton belt, reports of white fly, mealy bug and pink bollworm attacks as well as unavailability of reliable data about the crop size for the 2021-22 season.

The national rough estimates put cotton production between 7.5 and 8.5 million bales against the official target of 10.5 million. The country will need to import around five million bales to meet demands of the local textile industry. It imported cotton worth $1.39 billion last year.