Cotton spot rate hits all-time high of Rs19,000/maund

KARACHI: Local cotton prices remained firm during the outgoing week; however, the silver-fibre’s spot rate raced to an all-time high of Rs19,000/maund (37kgs), as demand outpaced production.

Traders said textile and spinning mills were cautious over the quality of lint, whereas ginners refused to sell cotton at lower rates, which stabilised around the highest level of Rs20,000/maund as a result.

Sources said one international trader was also involved in selling lint in the local market. During the last day, 2,000 cotton bales were sold at Rs19,500/maund. Few ginners, with quality cotton in hand, have been seen demanding Rs19,500 to Rs20,000/maund.

Due to a decline in cotton production in the country against the demand, local mills are entering into the cotton import contracts. However, as a result of a record increase in the prices in the country, a liquidity crunch is being witnessed.

Some mills have struck deals with Afghanistan, where around 600,000 bales have reportedly been produced. Of which, import contracts for 300,000 to 350,000 bales have been finalised. The deals are being made on a daily basis.

There is an issue of payments to Afghanistan whereas Federation of Pakistan Chambers of Commerce and Industry has urged the government to increase trade ties with the neighbouring country. There are reports that traders are interested in deals in the local currency instead of dollar.

Rates in the New York Cotton Market also remained stable, where prices ranged between 117 cents to 118 cents/pound.

Prices in the other international markets also stayed stable amid shipment and containers availability issues. Shipment rates also increased manifold during the pandemic.

Cotton prices in Sindh clocked in at Rs15,500/maund to Rs20,000/maund. The seed-cotton stocks have completely been sold in the province, while rates of cottonseed remained stable. Cotton prices in Punjab remained at Rs17,000 to Rs20,000/maund, while seed-cotton was sold at Rs6,000 to Rs8,500 per 40-kg. Cotton stocks have ended in Balochistan.

The spot rate committee of the Karachi Cotton Association raised the official spot rate by Rs400/maund during the outgoing week to Rs19,000/maund, which is the highest in the history of the country.

Naseem Usman, Chairman of Karachi Cotton Brokers Forum, told The News that the price trend remained mixed in the international market.

Prices in the New York Cotton Market increased to 119 cents per pound.

According to the weekly sales and export report of the USDA, a sale of 400,000 bales was recorded during the week, 85 percent higher than the previous week. Out of these bales, China remained the largest buyer with 139,500 bales, while Pakistan was the fourth-largest buyer of the week with 38,400 bales.

Prices in Brazil, Central Asia, and India also remained stable, while mills in India did not buy any cotton owing to higher prices.