LAHORE: To the concern of the textile industry, white lint prices touched a new peak in the Karachi cotton market on Wednesday where it was traded for over Rs14,500 per maund and analysts believe the rates are set to go up for breaking all-time records in a day or two.

Many factors are stated to be contributing to the cotton price spiral. These included rising disparity between dollar and rupee, hot world markets, reduced arrivals of the crop due to rains in the cotton belt, and delayed shipments of foreign consignments.

“There is a crisis-like situation in the local market as cotton rates have touched the Rs14,500 mark after about a decade,” Naseem Usman, a leading cotton broker, tells Dawn by phone from Karachi.

He recalls that cotton rates had peaked to this point back in 2011-12 when China had made heavy purchases in various world markets.

He says the rumor that Washington may impose certain sanctions on Islamabad in the wake of a bill moved in the US Senate proposing legislation against Taliban backers also played its role in the bullish trend in the local market, adding the high rates didn’t affect the trade volume.

Reports of damage to the crop in India due to rains, low production in China because of power crisis, and higher freight charges are other factors pushing the cotton price up in the local market, Suhail Mehmood Harral, a noted ginner says.

He claims that freight rates have increased by five folds and even then shipments are not reaching in time, unnerving the textile industry which is purchasing cotton from the local market also in view of the appreciation of the dollar against rupee making the foreign cotton costlier.

He doesn’t see the prices coming down in the near future and rather predicts a further hike to the advantage of growers, who are presently getting around Rs6,000 per maund, 20 percent more than the official indicative price of Rs5,000 per maund, for seed cotton.

Junaid Iqbal, another ginner, says that rains in the cotton belt are also affecting the picking of the crop and thus there are reduced arrivals in the market, while there is already low production of white lint in the country.

Published in Dawn, October 1st, 2021