Cotton prices hit 10-year high of Rs11,000/maund

KARACHI: Cotton prices in the local market hit a 10-year high of Rs11,000 per maund (40kg) in the week, mostly because of decreasing production and rising demand, while import orders for 4.2 million bales have also been finalised, traders said on Saturday.

Dealers said due to a decline in production, millers kept buying in the market, whereas ginners remained interested in selling because of favourable prices. Cotton rates increased Rs400 to Rs500/maund. In addition, prices of cotton yarn ad polyester also increased in the market.

High quality cotton rates increased to Rs11,000 per maund, which is the highest level in the last 10 years. Earlier, prices had crossed this level in 2010-11 when there was huge demand from China and rates reached Rs14,000 per maund. The prices around the world had also increased to abnormal levels in that year.

Some analysts predict that prices may further increase 20 to 50 percent in coming days. However, they would follow the trend in New York Cotton futures market that set trend around the world, they added.

Traders said textile sector was in a winning position and it was getting huge export orders despite Covid-19 pandemic led slowdown in economic activities.

“Cotton production has declined critically in the country but growers could not benefit from the higher prices, as ginners remained the beneficiaries and prices increased when seed-cotton was sold by the growers,” traders added.

“In order to fulfill demand of the local industry, there is need to import around 7.0 million bales. However, import orders for 4.2 million bales have been finalised.”

In the local market, Sindh’s cotton was sold at Rs9,500 to Rs10,700/maund, Punjab’s at Rs10,000 to Rs11,100 per maund, while Balochistan’s lint was sold for Rs10,200 to Rs11,000 per maund.

Karachi Cotton Association’s spot rate committee increased the spot rate by Rs300 per maund to the season’s highest level of Rs10,500 per maund.

Chairman Karachi Cotton Brokers Forum, Naseem Usman, said cotton prices in the international market had also increased.

New York Cotton Futures rose to 82 cents per pound during the week but due to decline in exports by 47 percent, they decreased to 79.50 cents per pound, according to USDA weekly report.

Prices also increased in Brazil, Argentina and Central Asia. Rates also moved up in India because Indian government is providing incentives to the growers and industry.

However, growers in Pakistan are moving to other crops due to substandard cotton seeds and zero incentivisation by the government. Even, a support price for cotton does not exist in Pakistan.

Local industry is suffering amid higher prices of cotton yarn and it has demanded removal of five percent custom duty on yarn imports.

Karachi Cotton Brokers Forum and Karachi Cotton Association’s Brokers Advisory Committee have jointly started advertising a campaign to increase cotton production.

They have appealed to the government to take measures on emergency basis to increase cotton production in the country.