Damaged crops: Cotton prices register 15% increase

Further rise in prices likely to create crisis-like situation in yarn market.

FAISALABAD: Heavy rains have caused substantial damage to cotton crops all over the country, leading to a shortage and the past week witnessed an increase in cotton prices by 15 per cent.

Cotton dealer Awais Ahmad told The Express Tribune on Wednesday that the price of raw cotton was around Rs4,500 per 40 kilogrammes at the start of the current season. “It is now around Rs6,400 per 40 kg,” he said.

Last year, the price of raw cotton increased up to a peak of Rs14,000 per 40 kg.

Higher cotton production was expected this year, but the recent floods in Sindh have forced analysts to revise their estimates. The total production of cotton stood at 11.9 million bales in 2010. The cotton production target was 14.5 million bales this year. But because of the damage to crops, Ahmad said that he feared the cotton prices might reach the last year’s level.

Also, yarn merchants say that a rise in cotton prices will create a crisis-like situation in the yarn market for a second consecutive year.

Generally, the price of yarn fluctuates by three to four per cent every week. However, it has increased 15 per cent over the previous week.

Talking to The Express Tribune, yarn merchant Ashraf Gandhi said that the resulting higher production costs would render the country uncompetitive in the international textile market.

Yarn prices have also increased as a result of  higher cotton prices.

The price of 20-single cotton count yarn has jumped from Rs1,084 to Rs1,325 per 10 pounds (lbs) (including sales tax).

Pakistan Yarn Merchants Association Chairman Fahim Shah told The Express Tribune that yarn prices depended on two factors: international rates and the day-to-day selling decisions of spinners, who often withhold sales for a day or two in order to maintain higher price levels.

Published in The Express Tribune, September 8^th,  2011.