In the domestic market, the Karachi Cotton Association said on Wednesday, the massive fall in cotton production pushed spot prices to an 11-year high of Rs11,700 per maund.
Within fifteen days, the sudden rise in demand in the intended market raised the US price of cotton by 12-15 cents per pound.
Brokers said cotton from Balochistan is being sold at Rs13,000 per maund, as well as bales imported from Afghanistan.
The cotton crop has seen a sharp decline in production, yield and area of cultivation over the last ten years.
In its latest report up to Feb 15, the Pakistan Cotton Ginners Association said production dropped to $5,617 million bales this year, compared to 8,547 million reported in the same period last year, a decrease of 34.29 per cent.
Brokers said this year’s arrival of cotton from ginners has already stopped. “This means that the domestic market could further increase cotton prices, while imports will see a sharp rise,” said Nasim Usman, Chairman of the Karachi Cotton Brokers Forum.
As the prices of US cotton have gone up over the last few weeks, spinners could face more difficulties. The importers said that the price of US cotton rose by 10 cents a pound, driving prices up from 84 cents to 94 cents a pound.
The country’s higher cotton prices have raised the cost of yarn used by the value-added industry.
As the value-added industry has been demanding that imports from India be permitted, the yarn producers (spinners) find the growing situation against their business.
As in the previous year, cotton production in India remained intact and prices were relatively lower than in Pakistan. Yarn prices are also lower in India compared to Pakistan.
Spinners say that there is ample cotton yarn available on the domestic market, while the value-added industry said that yarn is being retained to increase demand, resulting in higher prices for yarns.
Meanwhile, Aptma Zahid Mazhar’s senior vice president rejected statements made in the media by the Pakistan Hosiery Manufacturers Association and the Pakistan Textile Exporters Association concerning the country’s yarn shortage and their proposal to allow imports from India.
He reported that, according to the data released by the Pakistan Bureau of Statistics, the total output of cotton yarn during the period from July to Dec 2020 was 1,715 million tonnes, compared to the corresponding period last year when 1,714 million tonnes were produced in the region.
In the first half of the current financial year, only 10pc of the overall yarn production was exported, while 90pc was available to the downstream industry.
Just about 70pc is absorbed by the domestic downstream industry and the 20pc balance remains as a surplus.
He said the higher yarn prices are mainly due to the rise to Rs12,000 per maund in cotton prices. Imported cotton prices have also risen to 95 cents per pound, equal to Rs12,000 per pound.
Since spinners are purchasing expensive cotton from domestic and foreign markets this year, the cost of producing yarn is also higher than in the previous year,” he said.”