Cotton prices rise to fresh high
New York market, domestic demand push up prices.
KARACHI:
Cotton prices surged Rs500 to a fresh high of Rs11,500 per maund (37.324 kg) in the domestic market, taking cue from the skyrocketing New York exchange amid high demand from the domestic industry, experts said.
At the start of the cotton season in April last year, cotton prices stood at Rs5,500 per maund. On Friday, a deal was struck at Rs13,000 per maund. At present, 262 ginning factories are running in the country which needs cotton to cater to the demand of textile mills.
Cotton crop this year is expected to be short by around two million bales from the target due to the floods in July and August last year which damaged large parts of cultivated land. Final output this season is expected to be 12.6 million bales, the same as last year. Total demand of the country is estimated at 15 to 16 million bales per annum.
Cotton analyst Shakil Ahmed said the New York cotton market is playing a key role in sending prices higher in the domestic market. “In the New York exchange, cotton price stood at a high level of $1.72 per pound on Thursday, though it was lower than $1.81 - a 26-year high - hit earlier in the day,” he said.
Ahmed said floods have damaged cotton crops in Pakistan, Australia and Brazil and their impact was being felt the world over. “Demand for cotton in these countries will be higher than production, leading to high prices.”
He said Pakistani traders had struck contracts with Indian exporters for purchase of 850,000 bales of cotton at around 70 to 90 cents per pound in the second half of last year, but when prices shot up in the international market the Indian traders backed out and demanded higher prices. So far, Pakistan has received only 67,000 bales from Indian traders and that too at higher prices of 120 cents or above.
“The cotton season will come to an end in the next one or two months in the country and the next crop will arrive in June and July. Availability of water will be a key issue for sowing in the next season,” he said.
JS Global Capital analyst Bilal Qamar said big textile manufacturers have already purchased cotton earlier in the season to meet their needs by the end of current calendar year and have thus protected themselves from the high cotton prices. The mills had purchased cotton at Rs7,500 to Rs8,000 per maund.
However, Qamar saw the possibility of increased export of cotton yarn, following the trend of last year, in the wake of sky-high cotton prices, which will give handsome profits to yarn manufacturers. But this may lead to strong protest from the value-added textile sector due to a possible shortage of yarn in the country.
Published in The Express Tribune, February 5th, 2011.
Cotton prices surged Rs500 to a fresh high of Rs11,500 per maund (37.324 kg) in the domestic market, taking cue from the skyrocketing New York exchange amid high demand from the domestic industry, experts said.
At the start of the cotton season in April last year, cotton prices stood at Rs5,500 per maund. On Friday, a deal was struck at Rs13,000 per maund. At present, 262 ginning factories are running in the country which needs cotton to cater to the demand of textile mills.
Cotton crop this year is expected to be short by around two million bales from the target due to the floods in July and August last year which damaged large parts of cultivated land. Final output this season is expected to be 12.6 million bales, the same as last year. Total demand of the country is estimated at 15 to 16 million bales per annum.
Cotton analyst Shakil Ahmed said the New York cotton market is playing a key role in sending prices higher in the domestic market. “In the New York exchange, cotton price stood at a high level of $1.72 per pound on Thursday, though it was lower than $1.81 - a 26-year high - hit earlier in the day,” he said.
Ahmed said floods have damaged cotton crops in Pakistan, Australia and Brazil and their impact was being felt the world over. “Demand for cotton in these countries will be higher than production, leading to high prices.”
He said Pakistani traders had struck contracts with Indian exporters for purchase of 850,000 bales of cotton at around 70 to 90 cents per pound in the second half of last year, but when prices shot up in the international market the Indian traders backed out and demanded higher prices. So far, Pakistan has received only 67,000 bales from Indian traders and that too at higher prices of 120 cents or above.
“The cotton season will come to an end in the next one or two months in the country and the next crop will arrive in June and July. Availability of water will be a key issue for sowing in the next season,” he said.
JS Global Capital analyst Bilal Qamar said big textile manufacturers have already purchased cotton earlier in the season to meet their needs by the end of current calendar year and have thus protected themselves from the high cotton prices. The mills had purchased cotton at Rs7,500 to Rs8,000 per maund.
However, Qamar saw the possibility of increased export of cotton yarn, following the trend of last year, in the wake of sky-high cotton prices, which will give handsome profits to yarn manufacturers. But this may lead to strong protest from the value-added textile sector due to a possible shortage of yarn in the country.
Published in The Express Tribune, February 5th, 2011.