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Cotton price declines due to lukewarm demand
Jul '11
The spot rate for cotton at the Karachi Cotton Exchange (KCE) decreased by PKR 500 to close at PKR 6,200 per 37.324 kg on July 14. The sharp 7.46 percent decline has occurred due to the reduced demand and the accompanied increase in supply of stocks.

Being wary of the fluctuating price on a daily basis, spinning mills have temporarily put their cotton buying on hold, waiting for the price to decline further to PKR 5,500 levels. There are already reports of cotton price sliding to a low of PKR 5,800 in other parts of the country.

The downslide in prices is fuelled by the bumper cotton crop of 15.2 million bales expected this year, adequate enough to meet the demand. Secondly, yield is also going to increase this year in other cotton producing countries such as India, China and the United States, which are all expecting bumper harvest.

The weather conditions have so far been favourable in Pakistan and between 8,000 and 9,000 bales have already begun arriving daily in the market. This figure would rise as the new crop arrives.

In 2010, nearly 100,000 bales of cotton were packed everyday by 1,150 ginning mills operating in the country. The spinning mills are already holding stockpiles of 1.6 million bales from the last season when the prices touched the PKR 14,000 mark.

Due to the prevailing high prices during the previous season and the further rising trend, several fabric manufacturers had stocked expensive yarn. As a result, they are also unwilling to procure yarn without exhausting their existing stocks.

Fibre2fashion News Desk - India

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