Increasing cotton prices to drive exports

Finished textile product producers warn of rising unemployment, analysts value exports for fiscal year 2011 at $22b.

KARACHI: The rise in international cotton prices is expected to help increase exports of finished textile products in the coming months. Cotton prices have risen by 12 per cent in the past two weeks.

In October, Pakistan recorded exports of over $1.9 billion, a record high for a single month, on the back of increased exports of finished textile products.

However, exporters of finished textile products say that exports are increasing owing to sharp rises in cotton prices and the increase is only in terms of value and not in terms of quantity.

Cotton prices touched a new peak of $1.75 per pound internationally on Friday.

The rally was driven primarily by speculation that India may decide to extend its shipping period for export of three million bales to beyond December 15 or cancel all unshipped cotton contracts and offer them as renewed contracts at higher prices, a JS Global Capital Limited report said.

As markets opened on Monday, cotton prices in the Pakistani market followed suit and opened at Rs9,500 per maund (37.3kg). However, the average cotton price from September to date has been Rs7,900 per maund.

Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association Chairman Khwaja M Usman said that the increase in apparel exports is not helping the industry because small factories are closing down which is fueling unemployment.

“Actually, we are producing less and earning more which is not a good sign,” said Usman.

Analysts say that exports will be on the higher side and cross $22 billion in fiscal year 2011 on the back of increases in cotton and rice prices in the international market.

Published in The Express Tribune, December 21^st, 2010.