Cotton hits new highs on demand burst

KARACHI: Cotton, seed-cotton, and the spot rates scaled another historic peak in the outgoing week, for the most part owing to a fresh burst in demand for quality lint, traders said.

During the outgoing week, textile and spinning mills continued buying quality cotton, causing the prices to climb up despite good trade volume.

Quality cotton prices reached Rs16,700/maund (37.324 kg), seed-cotton Rs8,200/40 kg, and the official spot rate increased to Rs15,900/maund.

Cotton rates at New York Board of Trade reached 1.18 cents/pound after heavy fluctuation, while prices also remained on the higher side in the international market, while same trend was witnessed in India where rates soared to a historic high of Rs67,000/candy (356kg).

Sources in the industry said despite rupee appreciation against the dollar, cotton rates did not decline in the local market.

However, in case dollar value further declines in the local market, mills would move towards imports because of higher prices in the country, they added.

Due to an increase in the gap between cotton demand in the country and the production, the mills would be compelled to import cotton.

Nonetheless, due to fluctuation in the prices of the currency, both textile spinners and the value-added sector were currently puzzled whether to import cotton or not.

Textile sector in Pakistan was reporting growth as new mills were being set up that would raise demand for cotton in the country. But, a huge increase in the prices of local lint might affect the industry, one analyst said.

He said the textile sector would not survive on imported cotton, thus, there was a need to increase the production locally.

Historically, Pakistan did achieve a production of around 15 million bales twice.

According to analysts, in order to increase cotton production in the country, both the private sector and the government would have to take measures.

Cotton prices in Sindh remained at Rs12,500-16,700/maund, seed-cott on fetched Rs4,500-7,000/40kg, while cottonseed was sold at Rs1,350-2,000/maund.

In Punjab, cotton rates remained at Rs14,400-16,500/maund, seed-cotton Rs5,800-7,500/40kg and cottonseed was traded at Rs1,550-2,100/maund.

Balochistan cotton rates clocked in at Rs13,700-16,000/maund, seed-cotton Rs6,200-8,200/40kg, whereas cottonseed was sold around Rs1,600-2,200/maund.

Naseem Usman, Chairman Karachi Cotton Brokers Forum, said the international market overall recorded an increase in cotton prices during the outgoing week.

Prices remained higher in the US, Brazil, Central Asian States, Africa, and India, Usman added.

According to the weekly USDA report, US cotton export was recorded at 139,100 bales, down 61 percent compared with the last week. Furthermore, China was the largest buyer with 44,800 bales, followed by India that imported 24,300 bales.