Stable cotton prices shrug off rainfall impact in Sindh, Punjab


Lower production of cotton was witnessed in the country caused by heavy rains. Despite this decline, lower international prices coupled with inventory backlog can be accredited for keeping cotton prices in the local market at bay. During the current season, average cotton prices were seen at Rs 5,847 per maund (37.324 kg), rising by a minimal 1.5% YoY from Rs 5,761 per maund in the corresponding period last year.
Cotton arrival figures, revealed recently by the Pakistan Cotton Ginners Association (PCGA) for the period until March 1st, show a decline of 10 percent YoY due to heavy rainfall in upper Sindh and lower Punjab.
During the said period, a total of 12.63 million bales arrived in the market compared to 14.10 million in the corresponding period last year, said a research report compiled by Abdul Azeem of InvestCap Research
The report said Punjab contributed 73% (9.26million bales) in total cotton arrival so far, while Sindh contributed 27% (3.38 million bales) during the aforementioned period. On a fortnightly basis, cotton arrivals declined by a massive 47% YoY to 255,000 bales.
In Punjab, districts of Bahawalpur, Bhawalnagar, Rahim Yar Khan, Khanewal and Vehari, accounted for 55% of total production in the country, as cumulative cotton arrivals touched 5.19 million bales. In Sindh’s districts of Sanghar, Tharparkar and Hyderabad, cotton arrival reached 1.98 million bales, translating into a 16% share of the country’s total cotton arrival so far.
“We foresee the country to be able to produce 13million bales during the current season, which will be 12% YoY lower than last year’s arrivals of 14.8 million bales,” said Abdul Azeem in the report.
The government, he said, having initially established the cotton production target at 14.6 million bales for FY13 had now revised it to 13.3 million bales after deteriorating weather conditions for cotton crop in the country. “Despite the revision we see achievement of the target to be difficult as production figures are lagging behind,” he added.
The textile sector of the country is currently in the limelight due to the increasing profitability on the back of a low interest rate scenario.
Furthermore, the newly developed demand of cotton yarn from China has a positive impact on the sales of the local textile spinning businesses. In addition to that, resumption of duty-free export to EU is likely to improve the sales of local textile companies.