Monday, December 11, 2023

Cotton price hits the sky: breaks 11-year record

As, the cotton-growing area again fell sharply in both cotton-producing provinces, creating fears of a large decline in production, which raised the initial cotton trading price to an 11-year high.

Punjab and Sindh show that the area under cultivation has been reduced by more than 20 percent, which means that we cannot reach the production target of 10.5 million bales this year.

Cotton traders and ginners are sure that the country will not reach the target of 10.5 million bales set for this harvest that has just begun. The previous season, which ended in March 2021, could hardly produce 5.6 million bales against the government’s target of 11 million bales.

If estimates from ginners and traders, who are in contact with farmers, turn out to be correct, the country would have to import cotton worth $2 billion to $3 billion. This huge import would practically neutralize the impact of the increase in textile exports, which are supported by the government and the State Bank.

Chairman of the Pakistani Cotton Ginners Association, Dr. Jassu Mall said, one-third of the ginning plants remained closed during previous years due to very low cotton production.

“The fear of scarcity has already raised cotton prices in the local market. The highest price – Rs14,000 per bale – was witnessed on Thursday, the highest in 11 years,” said Nasim Usman, president of the Karachi Cotton Brokers Forum.

He said local cotton prices are much higher than international prices, creating room for more cotton imports this year, which would cost a lot for a country struggling to reduce its trade deficit.

Dr. Jassu Mall said that in many areas of the two provinces, farmers have started to sow maize, sugarcane, rice, and other crops instead of cotton.

“Since farmers can get three corn crops in a single year, it’s the most attractive crop for them as they have a much better income,” he said.

“If the weather supports cotton growing this year, production could reach about 7.5 million bales despite low cropping,” he said, adding that last year’s heavy rains were the biggest reason for the decline in cotton production.

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