KARACHI: The massive drop in cotton production pushed spot prices to an 11-year high of Rs11,700 per maund on the domestic market, the Karachi Cotton Association said on Wednesday.
A sudden increase in demand in the market that deliberately increased the price of US cotton by 12-15 cents per pound in fifteen days.
Brokers said cotton from Balochistan as well as bales imported from Afghanistan was selling for Rs13,000 per maund.
Over the past ten years, the cotton crop has experienced a sharp decline in production, yield and cultivated area.
The Cotton Ginners Pakistan Association in its latest report through Feb. 15 said production fell to $ 5.617 million bales this year compared with 8,547 million bales recorded in the same period last year, down 34.29 percent.
The brokerage said the arrival of cotton from ginners was over for this year. “This means that cotton prices can continue to increase in the domestic market while imports will increase sharply,” said Nasim Usman, Chairman of the Karachi Cotton Brokerage Forum.
Spinners may face more difficulties as US cotton prices have risen over the past few weeks. Importers said the 10 cents per pound increase in US cotton prices had pushed prices up from 84 cents to 94 cents per pound.
Higher cotton prices in the country have increased the cost of yarn used by value-added industries.
Yarn producers (spinners) find a situation increasingly at odds with their business as the value added industry demands that imports from India be allowed.
Cotton production in India has remained intact as in the previous year and prices are relatively lower than in Pakistan. Yarn prices in India are also cheaper than Pakistan.
The spinners claim that a sufficient amount of cotton yarn is available in the domestic market while the value-added industry says that the yarn is stored to increase demand resulting in higher yarn prices.
Meanwhile, Aptma Senior Vice Chairman Zahid Mazhar rejected statements that appeared in the media from the Pakistan Hosiery Manufacturers Association and Pakistan Textile Exporters Association regarding the yarn shortage in the country and their proposals to allow imports from India.
He said that during the period from July to Dec 2020 as per data released by the Pakistan Bureau of Statistics, the total production of cotton yarn was 1.715 million tonnes compared to the same period last year when 1.714 million tonnes were produced in the country.
Of the total yarn production, only 10pc was exported in the first half of the current financial year while 90pc is available for the downstream industry.
The domestic downstream industry only consumes about 70 percent and the remaining 20 percent is still a surplus.
He said the increase in yarn prices was mainly due to the increase in cotton prices to Rs12,000 per maund. The price of imported cotton also rose to 95 cents per pound which is equivalent to Rs12,000 per maund.
“Because spinners get expensive cotton this year from the domestic and international markets, the yarn manufacturing costs are also higher than the previous year,” he said.
Published in Dawn, February 25, 2021
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