Rupee depreciation raises cotton prices by Rs3,500 per maund

KARACHI: Cotton prices heavily fluctuated during outgoing week with an unusual increase of Rs3,500 per maund (37.324 kg) in cotton spot rate on depreciation of Pak rupee, stakeholders said on Saturday.

The current monsoon season is also likely to affect the crop, they added.

The seed cotton rates also increased by Rs1,000 to Rs1,500 per 40kg bag. Last week, the cotton market operated for only three days after Eid ul Adha holidays and monsoon rains. A few deals were recorded around Rs13,000 to Rs14,500 per maund in Sindh and Rs16,000 to Rs16,500 per maund in Punjab.

However, the outgoing week saw an abnormal increase in the prices on the back of a sharp decline in the rupee value. This week, cotton rates in Sindh gained to around Rs16,500 to Rs17,000 per maund, Rs19,000 to Rs19,500 in Punjab, and Rs16,500 to Rs17,000 in Balochistan. The prices of seed cotton also increased in the three provinces accordingly.

Karachi Cotton Association’s spot rate committee increased the official spot rate by Rs3,500 per maund to Rs18,000 per maund.

Stakeholders said the textile sector of the country was also facing issues becose of high cotton prices, though high dollar value could increase their profit margin.

The spinning sector was unable to stock cotton after purchasing it at higher rates.

Per month expenses on a cotton maund reached around Rs300 under insurance charges and an increase in the interest rates by the banks.

Besides, there was a decline in the demand for cotton yarn, which discouraged the spinners from buying cotton at higher prices and bearing losses. Import of cotton would also be expensive on the dollar scarcity. Thus, they were puzzled to take the decision.

On the other hand, ginners were in a better position in Sindh province while the cotton crop was also better in Punjab as compared to the previous years.

Experts said since monsoon season continued, it was prior to estimating the cotton crop. However, there is an estimate of 9 million bales. Patron-in-Chief of All Pakistan Textile Mills Association (APTMA), Gohar Ejaz, said there would be a need to import around 6 million bales this year to fulfill demand of the industry.

Chairman Karachi Cotton Brokers Forum Naseem Usman said after fluctuation in the international market, prices remained overall stable. New York Cotton Market’s December futures fluctuated between 88 cents to 93 cents per pound, but closed at around 90 cents per pound.

According to the USDA weekly export and sales report, the volume of sales increased for the week. Pakistan remained the fourth largest buyer with 22,200 bales after China, Vietnam, and Turkey.