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Increasing cotton prices: Trouble for local textile sector

17
Nov '09
As a large number of international buyers rushed to Pakistan amid a fall in world cotton production, it has been predicted that the domestic cotton prices may see further hike, which have already increased by 21 percent since the beginning of ongoing year, and would influence the local textile sector.

Exporters complained that the export of raw cotton caused shortage for the power-looms, and continuance of the same would force the textile mills to close down their shutters in coming days.

Unbridled export of raw cotton and cotton yarn has become the major troublesome issues for the local value-added sector, even though the local cotton production is expected to increase during current season.

This fiscal year, the government has targeted to produce 12.5 million bales of cotton compared to 11.3 million bales produced last year. Improved consumption of new BT cotton-seeds resulted in high cotton production during the current fiscal.

According to the recent statistics revealed the by Pakistan Cotton and Ginner Association (PCGA), cotton arrivals have depicted a 40 percent Y-o-Y increase to 7.3 million bales. But, it has been believed that the cotton production would not meet the target set by the government.

The International Cotton Advisory Committee anticipated that the world cotton production would fall by 5 percent to 103 million bales, while China's cotton production would collapse by 16 percent Y-o-Y on account of lower acreage and unfavorable climate conditions.

Cotton prices are witnessing a surge since last few months and are at Rs. 4,000 per maund at present.

As the demand from international markets such as China and India is increasing, cotton prices are likely to hover in the range of Rs 4,000 to Rs 4,100 per maund despite an 11 percent production growth expected in fiscal year 2010.

All these issues made local cotton prices to soar up by 21 percent since the beginning of the current cotton season, whereas the demand made by the sector to impose ban on cotton and yarn exports, put pressure on rising cotton prices to some extent, said an expert.

Fibre2fashion News Desk - India


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