A serious cotton crisis is looming large in the world market as its prices have increased by 13 percent during the last one week in the wake of expected shortfall of the United States (US) cotton crop during current year, traders said on Saturday.
They said that the cotton prices in the world market were on the rise for the last some weeks, which had now gone up by seven cent or 13 percent to 61 cent per pound during the last one week. "We were importing raw cotton from the US and other countries at an average rate of 54 cent per pound, presently stands at 60-61 cent per pound in the world market," a leading importer said.
He said that cotton prices in the world market was gradually increasing, which put a negative impact on the local trade, adding that in the future, cotton prices in the country might surge. During the current year, the cotton prices in the local market were already at the high peak of Rs 2,900 per maund, he said.
The US cotton acreage could be nearing an 18-year low as the farmers in growing numbers switch over to more remunerative crops like corn and wheat. The US Department of Agriculture estimated the upland cotton area for 2007 at 10.760 million acres - the lowest since 1989-and down from projections of 11.6 million acres for the current year, while as compared to last year, showing a reduction of about 25 percent in crop size.
"Reduction in the yield is the main reason behind this price hike in the international market, while field production for the current season put at 15.71 million bales against a previous 21.59 million bales last year," importers said. International traders are increasing prices and are offering 63 cent per pound for December delivery, they added.
Cotton is the basic raw material of the textile industry and major countries, including Pakistan, India, Sri Lanka and other countries are facing shortage. Although Pakistan is an agriculture country and it is the fourth largest producer of cotton in the world, yet it has failed to fulfil its local demand and depends on import of raw cotton from different countries, including US, India and Brazil.
Country's raw cotton import witnessed a rise of 64 percent during July-May 2007 due to falling short of cotton production by 0.6 million, while the overall shortfall stands at over three million bales, importers said.
During the first 11 months of the current fiscal year, raw cotton import has increased by 64 percent to 559.306 million dollars as compared to 340.865 dollars during the same period of last fiscal, depicting an increase of 218.441 million dollars during July-May 2007.
India- the third largest producer of the cotton is also facing some shortage of cotton, as it has exported the surplus stocks. It is now expected that during the current fiscal year, if the cotton production target of Pakistan, India and Chine were not achieved, a serious crisis may create, which could affect the world cotton prices and demand, a analyst said.
He said that the current year's cotton demand all over the world expected to raise around five percent, therefore increasing cotton demand and declining cotton production would have a negative impact.
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