Pakistan cotton prices witness drop despite rising price trend on the world market

In the face of rising price trend on the world markets, Pakistan has not only decreased local cotton prices, but also had a bearish effect on Pakistani textile prices and their exports due to award of five percent additional subsidy by Indian government on export of cotton yarn both coarse and fine counts and enforcement of 25 percent regulatory duty on cotton yarn imports from Pakistan to India has resulted in huge imports of cotton yarn imports from India by Pakistani textile industry.

Pakistan cotton prices during last two weeks dropped by 300 to 400 rupees and declined to Rs 6,700 per maund. The domestic cotton market is very quiet and weak. There is a drastic drop in local buying.

The appreciation of the Pakistani rupee against the American dollar in recent weeks from about Rs 107 / Rs 108 against the greenback to about Rs 98.10 per dollar now has disturbed many exporters of textile goods. As a result, the local money market is also very tight and there is a paucity of funds with the textile spinners and traders.

Therefore, in an apparently anomalous situation, white the global cotton prices and the New York cotton futures prices are quite high, domestic lint prices have been wilting in recent weeks. Seed cotton (Kapas/Phutti) is limited in the market but notional prices in both Sindh and Punjab would range from Rs 2500 to Rs 3100 per 40 Kilogrammes. Lint prices in Sindh reportedly ranged from Rs 5500 to Rs 6600 per maund (37.32 Kgs), while in the Punjab they are said to have ranged from Rs 6400 to Rs 6700 per maund according to the quality.

According to the seed cotton (Kapas/Phutti) arrivals report for the current season (August 2013 / July 2014) till the 15th of March 2014, 13,369,627 lint equivalent bales have been received by the Ginners from which the domestic mills have lifted 12,148,634 bales. Exporters have picked up 369,673 bales while the ginners still have 851,320 bales left unsold with them in both loose and pressed form.

According to leading cotton traders, member of Pakistan Cotton Ginners Association (PCGA) and textile manufacturers if import of yarn from India is not blocked and additional concessions for yarn exporters are not announced by the government, then whole of the cotton industry may face disaster and consequently cotton sowing in current season may be adversely affected.