Cotton prices peaked after 11 years as the spot rate has also increased to an all-time high in the history of the cotton trade in Pakistan.
Much of this is being attributed to the decline in the total production by the industry players, a national daily reported.
Cotton production in Pakistan has been recorded at 5.6 million bales only, which is the lowest level in 30 years against the mill consumption of around 15 million bales.
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Pakistan would have to import around eight million bales that would cost the country around $4 billion if cottonseed, oil, and other by-products are included, thus adding to the country’s import bill.
The Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, informed the media that cotton prices had traded at Rs. 12,000 per maund (approximately 40 kg), which is the highest in 11 years.
The spot rate per maund was at Rs. 11,700 as decided by the Spot Rate Committee of the Karachi Cotton Association, which is also the highest price in the history of the cotton trade in Pakistan. An additional Rs. 180 as upcountry expenses have further pushed this rate to Rs. 11,880 per maund.
Usman said that prices moved up because of a critical decline in cotton production. Prices also remained higher in the international market.
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Usman said that the government does not have a concrete strategy to increase the production of cotton in the country, and sugarcane and other cash crops have replaced cotton in several cotton-growing areas of Sindh and Punjab as substandard seed and pesticides had compelled farmers to move to other crops. He said that it is a matter of grave concern for the cotton industry.
Cotton stockpiling in factories was recorded at 5.61 million bales, down 34.29 percent from the 8.54 million bales stocked in the same period last year, as per a report of the Pakistan Cotton Ginners Association (PCGA) last week. Currently, 315,256 bales are in stocks with the ginners, down 54.62 percent as compared to the 694,717 bales stocked last year.