Cotton prices have reached new highs in the domestic market, owing to a drop in domestic output, a delay in cotton imports from overseas, and an increasing dollar-rupee difference.
On Wednesday, the Karachi Cotton Association reported a spot pricing of Rs13,580 per maund for white lint, while seed cotton rates ranged between Rs5,200 and Rs6,200 per maund.
A year ago, the ex-gin price in Karachi was Rs 8,550 per pile, while the cost of seed cotton was between Rs 4,000 and Rs 4,500 per pile. In the period 2020-21, the average price of seed cotton was Rs 5,016 per maund.
According to Naseem Usman, head of the Karachi Cotton Brokers Forum, these are the highest rates since 2010-11, when prices surpassed Rs14,000 per maund.
According to a textile miller who asked not to be identified, the local industry is in hot water these days since, unlike in the past, cotton prices in the foreign market have nearly equaled the ‘expensive’ local one.
“We have acquired over 11 million bales of cotton from other countries, but the shipment is being delayed mostly due to Covid-19 limitations. The delay influences the local market since we must fulfill our demand from domestic sources until the imported raw material arrives.”
He claims that they are compelled to make local purchases to keep their units functioning, but the domestic cotton is short in staple and of low quality due to contamination.
The ginning business foretells much more disaster. Muhammad Junaid Iqbal, a ginner from Rahim Yar Khan district, says seed cotton prices in Punjab markets are now reaching Rs6,200 per maund, and he believes they may rise to Rs7,000 if supplies from outside are further delayed.
Last season, Pakistan gathered 5.6 million cotton bales, the lowest in 30 years, whereas the textile sector requires at least 15 million bales. To make up the difference, it will have to import around nine million bales.