The resumption of cotton spot rates by the Karachi Cotton Association (KCA) after a six-month suspension has brought relief to stakeholders across Pakistan’s cotton and textile value chain, with industry participants expecting greater stability and transparency in market transactions.
The KCA issued the final cotton spot rate for the 2025-26 cotton year at Rs. 21,000 per maund on June 6, marking the first benchmark rate released since December 12, 2025. The association is scheduled to announce the first spot rate for the 2026-27 cotton year on June 8.
The suspension followed the Federal Investigation Agency’s takeover of the Karachi Cotton Exchange building in December 2025 due to ownership-related disputes. According to Cotton Ginners Forum Chairman Ehsanul Haq, the absence of an official spot rate not only removed Pakistan’s cotton price benchmark from international markets but also created significant operational challenges for banks, insurers, ginners, and textile manufacturers.
Without an officially published benchmark, commercial banks continued using the last available KCA spot rate of Rs. 15,500 per maund when extending financing against pledged cotton stocks. However, cotton prices in the open market had risen to nearly Rs. 22,000 per maund, creating financing gaps and liquidity pressures for textile mills.
The issue became serious enough for the All Pakistan Textile Mills Association (APTMA) to approach the State Bank of Pakistan through an urgent letter last week. The association requested that banks be allowed to use prevailing market prices instead of the outdated benchmark when determining the value of cotton stocks pledged as collateral.
Apart from financing concerns, the absence of a benchmark rate also complicated insurance claim settlements involving cotton inventories and created uncertainty across the textile supply chain. Industry stakeholders said the return of the spot rate restores an important reference point for pricing, financing, risk management, and trade.
Meanwhile, market participants reported that cotton and phutti prices remained firm during the past week. Industry observers also noted that cotton cultivation in Punjab is progressing below expectations, raising concerns about future supply and adding support to current price levels.
