Cotton Production Surge Amidst Financial Crisis and Market Challenges

The cotton production in Pakistan has witnessed a remarkable surge of 71%, reaching a total of 8.4 million bales. However, despite this uptick, ginners are left only with 60,000 bales in stock as the crop season comes to a close. The local business remains sluggish, compounded by a bearish trend in the international cotton market. This crisis has further deepened the woes of the textile sector, facing a severe financial crunch. The absence of a cotton production target from the Federal Committee on Agriculture for the upcoming season adds to the uncertainties prevailing in the industry.

The delay in announcing the intervention price for cotton is another pressing issue. The recent increase in petrol and electricity prices by the government has added to the concerns of the industrial sector. High energy costs are making production expenses soar, affecting the operational capacity of industries. The unresponsive stance of the government towards industrial appeals is leading to a peak in inflation and rising unemployment rates.

The water availability for the upcoming Kharif crop season poses a significant challenge, with reports indicating a 35% deficit in water supply. The delay in announcing the cotton production target and intervention prices by the government is exacerbating the uncertainties in the market. In provinces like Sindh and Punjab, cotton prices fluctuate between Rs 20,000 to Rs 22,000 per maund, while Phutti costs range from Rs 9,500 to Rs 10,500 per 40 kg.

According to market reports, the Spot Rate Committee of the Karachi Cotton Association has maintained the cotton rate at Rs 21,500 per maund. Naseem Usman, Chairman of Karachi Cotton Brokers Forum, highlighted a downturn in international cotton prices, with significant drops in New York cotton rates. The latest export and sales data from the USDA revealed sales of 84,900 bales for the year 2023-24.

In terms of market transactions, China emerged as the leading buyer, acquiring 35,300 bales, followed by Turkey and Honduras. The total bales sold for the fiscal year 2024-25 stood at 22,900 bales, with significant purchases by Honduras and Bangladesh. The cotton ginning factories have processed over 8.3 million bales, marking a 70.94% increase in production compared to the previous year.

Despite these market dynamics, challenges persist in the industry, with stakeholders emphasising the need for government intervention and policy support to navigate the volatile market conditions and ensure the sustainability of the cotton sector. Initiatives like the establishment of an economic think tank by the FPCCI are seen as positive steps towards promoting economic activities and formulating robust policies for the industry’s revival and growth.

Leave a Comment

Your email address will not be published. Required fields are marked *