As a result of the sharp increase in worldwide cotton prices, the price of cotton in Pakistan has risen to an all-time high of Rs15,500 per 40 kg, causing a new wave of fear in the country’s textile industry.
According to Chairman of the Karachi Cotton Brokers Forum Naseem Usman, cotton futures in New York opened at 113.92 cents per pound on Wednesday morning, surpassing the $1 per pound mark for the first time in ten years.
“The statement has wreaked havoc on Pakistan’s cotton market,” says the author.
He stated that the price of cotton in Pakistan has climbed substantially by Rs700-1,000 per 40 kg and that the price of high-quality cotton has reached Rs15,000 per 40 kg in the open market, while Balochi cotton is being sold for Rs15,500 per 40 kg. He concluded by stating that
“These are all-time high rates for Pakistan,” says the analyst. As a result of the rising price of cotton on the international market, textile mills have also been unable to enter into import agreements.
Exporters of textile items, on the other hand, were cautious when it came to securing export orders, owing to uncertainty regarding the price of cotton as well as instability in the rupee-dollar exchange rate. In addition, container and freight rates were on the rise as a result of the rising tendency.
“The price increase has thrown the market into disarray, with textile spinners, in particular, suffering as a result,” he explained. ‘They have no idea if they will be able to obtain a reasonable price for their end product (cotton yarn) or not,’ says the author.
According to him, if the price of cotton and cotton yarn both rose at the same time, mills would purchase the commodity; otherwise, they would opt not to stockpile cotton for the next several months at such an exorbitant price.
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The market veteran stated that if the worldwide cotton price were to fall, the stakeholders would suffer enormous losses, citing a lack of faith in the cotton business.
Usman noted that earlier in the 2011-12 cotton season, the price of cotton futures in New York jumped to an all-time high of $2.26 per pound as a result of strong purchases by China, which he attributed to the price spike.
The price of cotton for 40 kg in Pakistan at the time of his interview was Rs14,500 at the time of his interview. “As a result of the price increase, a wave of bankruptcies in the textile industry occurred, with several cotton yarn factories being forced to close their doors.”
He voiced concern about the fact that there were a number of parties who benefited from the scenario.
After closing at Rs14,300 per 40 kg on Wednesday, the Karachi Cotton Association announced an Rs400 increase in the spot pricing of cotton, which was previously at Rs14,300.