KARACHI: Cotton prices peaked to an 11-year high on Wednesday, while the spot rate rose to historical cotton trading all-time highs in Pakistan, traders said, attributing this to a decline in total production.
Karachi Cotton Broker Forum Chair Naseem Usman said the cotton price was trading at Rs12,000 / maund, which is the highest in 11 years. The spot rate rose to Rs11,700 / maund by the Karachi Cotton Association spot rates committee on Wednesday, which was the highest price in the history of cotton trading in Pakistan.
The increase in Rs400 was recorded at the spot rate. The Ex-Karachi spot price was raised to Rs11,880 / maund after adding Rs180 as upcountry fee. Usman said prices were rising due to a critical drop in cotton production. Prices also remain higher in international markets.
New York Cotton Futures posted a gain of 10 cents to 94 cents per pound, which is also the higher level in several years.
Cotton production in Pakistan is recorded at just 5.6 million bales, which is the lowest level in 30 years, compared to factory consumption of around 15 million bales.
Pakistan will have to import about 8.0 million bales which will cost about $ 4 billion into the country when cottonseed, oil and other by-products are included. This will increase the country’s import bill.
Usman said the government does not have a concrete strategy to increase domestic cotton production, which is a matter of great concern. Sugarcane and other cash crops have replaced cotton in some of the cotton growing areas of Sindh and Punjab, as substandard seeds and pesticides force farmers to switch to other crops.
One stakeholder said that cotton production had increased in 2008-9 due to BT cotton cultivation, which was brought into the country via informal channels.
BT cotton seeds need to be increased every year in order to provide the best results, he said. Because the seeds are not imported legally, the seeds lose their resistance to pests. There is a need to introduce genetically modified seeds, which will increase production, he added.
A report by the Pakistan Cotton Ginners Association (PCGA) last week stated that cotton hoarding in factories was recorded at 5.61 million bales, down 34.29 percent from 8.54 million bales in the same period last year.
Currently, 315,256 bales are in stock with the ginners, down 54.62 percent compared to last year’s 694,717 bales.
Punjab hoarded 3.48 million bales, down 31.41 percent, compared to 5.07 million bales in the same period last year. Arrivals from Sindh fell 38.51 percent to 2.13 million bales compared to 3.47 million bales collected at the ginning factory in the same period last year.