Cotton markets volatile

Cotton prices continued to decrease as the initial panic brought on by the floods in began to subside.

KARACHI: Cotton prices continued to decrease as the initial panic brought on by the floods in Punjab and Sindh began to subside. The panic had ushered a large number of buyers into the market last week.

A week after surging to a record high of Rs7,000 per maund, cotton prices this week eased to settle at Rs6,300 per 37.325 kilogrammes.

Rates received from local cotton exchanges show that trading activity was concentrated at rates of Rs6,600 per maund on Monday.

Prices climbed slightly since the start of the week’s trade to Rs6,700 during the week but dropped by Rs200 on Friday and Saturday, both, to close at Rs6,300 per maund in Punjab.

Cotton rates in Sindh were down to Rs6,200 – the lowest recorded in the province over the past two weeks.

“Many areas that supply phutti (raw cotton) had been completely cut off due to rains and floods. In the past few days, access to some of these areas has been restored and supplies have been re-established,” commented a cotton trader.

“More than anything, the panic that was caused by the floods has eased and now people are waiting for more reliable estimates,” he added.

Traders pointed out that demand is also weak because of lack of electricity. Many spinning mills are operating under capacity due to gas curtailment in Punjab.

Early estimates of the damages put the loss in cotton cultivation in the current season as high as two to three million bales.

Experts have forecast that some raw material may even have to be imported by the textile sector.

The country’s exports for the month of July have already registered deceleration in all textile products, except raw cotton.

Sources contend that weak demand for raw cotton in the local market may be the harbinger of trying times for the textile sector in the months ahead.

Published in The Express Tribune, August 22^nd, 2010.