Cotton prices continued their downward trend losing further Rs. 1,000 during the week in the spot market, closing at Rs. 17,000 per maund on Friday.
Karachi Cotton Association (KCA) Spot Market has declined by nearly Rs. 4,000 per maund since early September from the peak of Rs. 21,000 per maund. Spot market prices fell from 18,000 per maund on Monday to Rs. 17,000 per maund today.
Punjab Phutti (seed cotton) prices have also followed a similar trend and have declined by more than Rs. 2,000 per maund in a month. Prices in Rahim Yar Khan, Bahawalpur and Sahiwal have dropped from nearly Rs. 9,400 per maund to Rs. 7,600, Rs. 7,750 and Rs. 7,150 per maund respectively while prices in D.G Khan and Mianwali are reported at Rs. 7,300 and Rs. 7,750 per maund respectively.
The primary contributor is the fall in dollar prices from the peak of Rs. 307 to Rs. 282.69 which made imported cotton more lucrative. The impact will be further pronounced if the decline in crude prices translates into lower shipping costs for the importers but there is a more interesting factor in play.
“The recent crackdown on sugar, gold, fertilizer and other commodities has scared away the traditional ‘investors’ and hoarders who used to stock these commodities traditionally and manufacturers are not looking to buy big stocks at the moment” stated a market consultant while talking to ProPakistani
He added that the cotton market may move towards stability and improvement in November or December.
Another factor is the whitefly and mealy bug attack on key cotton growing regions in South Punjab that in addition to impacting the yields, has also affected the quality and subsequent price for the growers.
It is imperative to note that if the impact of the recent administrative measures is not translated into a substantial decline in prices of key agri inputs then this recent fall in cotton prices will be a huge financial hit for the farmers who have the biggest stake in the market. It can hamper the government’s efforts to revive cotton as a critical cash crop.
Source: Pro Pakistani