LAHORE: The Spot Rate Committee of the Karachi Cotton Association on Monday increased the spot rate by Rs 1000 per maund and closed it at Rs 15,500 per maund. The local cotton market remained steady and the trading volume remained low.
Cotton Analyst Naseem Usman told Business Recorder that the rate of cotton in Sindh is in between Rs 14,000 to Rs 15,000 per maund. The rate of cotton in Punjab is in between Rs 16,00 to Rs 17,000 per maund. The rate of Phutti in Sindh is in between Rs 4000 to Rs 6,000 per 40 Kg. The rate of Phutti in Punjab is in between Rs 55,00 to Rs 7,000 per 40 Kg.
200 bales of Sanghar were sold at Rs 14200 per maund, 200 bales of Bahwalpur were sold at Rs 16,250 per maund, 200 bales of Layyah were sold at Rs 16,500 per maund.
Patron in Chief All Pakistan Textile Mills Association (APTMA) Dr Gohar Ejaz in a statement has indicated that the Pakistan textile industry is expecting a notable increase in exports during FY23 with a growth rate above 20 percent given that the government continues with the Policy of ‘Regionally Competitive Energy Tariffs’ for Exports.
Textile industry has posted record exports of $4 billion in FY22 with its expansion and investment plans of about $5 billion under LTFF and TERF schemes - YOY growth of 25 percent up till June 30, 2022.
In addition, Pakistan textile industry plans to import 6 million bales of cotton this year from the USA and Brazil.
Last month, world cotton prices finally begin to show signs of easing. Spot prices are down 37 percent from peak levels touch in April 2022 with per lb price falling below $1 for the first time since October last year. Does the crash in the cotton market bode well for textile players, as it comes on the back of inventory building at decade-high prices?
Whether local textile value chain will benefit from the brakes pushed on price rally remains to be seen. On one hand, local industry has imported cotton at average unit price of $2.3 per kg in the past 12-months, which they may no longer be able to price into future export contracts as raw material prices come down crashing. On the other hand, global prices have crashed at the cusp of fresh local crop arrivals, which means inventory building for the following year can take place at weakest levels in over a year.
Meanwhile, global cotton futures are still trading well above $2.25 per kg, significantly higher than pre-pandemic levels (2019), when per kg price had remained rangebound under $2 per kg.
Although world cotton output remained below pre-pandemic levels during 2021-22 season – at 25.3MMT, it is now forecast to reach 26.1MMT during the upcoming marketing year 2022-23, highest in 5 years. As consumer demand tanks given the risk of a global recession, cotton prices may come down a lot more in the months to come. But will they fall back to the pre-pandemic range?
Not necessarily. USDA projects that the ending stocks to use ratio for the upcoming 2022-23 season will remain unchanged at 70 percent, even as demand stutters. Although this may appear significantly lower than the pandemic year when the ratio climbed all the way up to 95 percent, it is still above pre-pandemic levels of 67 percent. World cotton prices had remained rangebound between $1.6 to $1.9 per kg between 2017 and 2019. Thus, past trend indicates that the global cotton inventory is yet to show signs of stress.
The Spot Rate Committee of the Karachi Cotton Association on Monday increased the spot rate by Rs 1000 per maund and closed it at Rs 15,500 per maund. The rate of polyester fiber decreased by Rs 10 and was available at Rs 315 per Kg.
Copyright Business Recorder, 2022
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