Cotton prices continue to hover around all-time highs

KARACHI: Cotton prices are continuously hovering around all-time highs as after Balochistan last week, silver fibre hit Rs14,500/maund in Punjab also on Tuesday as weak rupee and wobbly supply weighed, analysts said.

This is the highest rate Punjab has ever seen in the history of the country. Prices touched this level in 2010-11. On the other hand, cotton prices in Sindh also shot up to the province’s all-time high rate of Rs14,400/maund.

Spot rate committee of the Karachi Cotton Association increased the official rate to Rs14,200 for a maund and Rs15,218 for 40kg. The rates increased to Rs14,380/maund and Rs15,411/40kg respectively after an addition of Rs180 and Rs193 upcountry expenses.

Sources said due to an increase in the cotton prices and electricity rates, cotton yarn prices were also trading at the highest rates in Faisalabad, affecting the power looms sector.

Naseem Usman, a leading cotton broker and market analyst, told The News the cotton rates had reached the all-time high to Rs14,500/maund in 2010-11 as a result to China’s binge-buying from the major cotton-producing countries around the world. The US prices were also pushed to an all-time high of over $2 per pound, Usman said.

This time, the major reason of an increase in the prices is depreciation of rupee. In 2010-11, dollar was at Rs85-86, now it is at Rs165. However, cotton crop in the country was also at the lowest level of 5.6 million bales in 2020-21.

Independent analysts said an increase in the cotton prices was a blessing in disguise, as it would bring more area under cotton cultivation next year and those growers that had switched to other crops might switch back to cotton.

Seed-cotton rates have already reached at the all time high level. It is being traded at Rs5,800/40kg to Rs6,300/40kg in Sindh and up to Rs6,400/40kg in Punjab. Rates of Balochistan seed-cotton, which is of high quality, reached Rs7,200/40kg.

Last year, cotton was sold around Rs8,500/maund and seed-cotton fetched a price of Rs4,500/40kg. Thus prices have almost doubled this year.

Due to an increase in the rates, export shipments are also late but mills have been buying at higher prices because of their commitments with international buyers, traders said. Now, yarn profit is down; however, some mills are facing financial crisis, traders said.

The imported cotton has also become costly because of depreciation in the currency, while traders expect the cotton rates may further increase.

Federal government has estimated cotton crop at around 10 million bales this year compared with 5.6 million bales last year.

On the other hand, Gohar Ijaz, leader of All Pakistan Textile Mills Association, said Pakistan would import cotton seed from USA, Brazil, China, and Uzbekistan, while an area of 10,000 acres had been allocated for research and development of varieties of cotton that offer higher yield, quality, and pest resistance.