Pakistan, a net importer of cotton is witnessing stability in wholesale cotton prices amid diminishing local inventories.
Imports of cotton from the United States, at 81.50 U.S. cents per pound from January 20, 2024 helped balance higher domestic prices. Cotton exports by the U.S. to destinations like Pakistan rose by 60% on January 23 over those of the previous week.
Yarn prices, however, have been rising from notching up electricity tariffs but have bottomed out in week 4 of January.
A boom in worldwide textile trade had earlier attracted a month-long increase of Rs 4000 ($14.28) per 37 kg bale of domestic cotton. This rise pushed the reigning cotton prices in Pakistan above the Rs.18,000 ($66.00) per bale mark.
However, in the week starting January 29, the phenomenal rise has bottomed up, leading to price stability.
Even after stabilizing, prices of domestic cotton in the textile hub of Sindh were still higher than their international equivalents on January 29. Bales sold at a bottom cost of Rs 18,500 ($66.05) per maund (37kg).
In Punjab, local cotton was selling at a top price of Rs 2,200 ($72.11) per maund. This was unlike Phutti, where the cost was as low as Rs. 8000 ($28.56) on the 29th.
Apart from Phutti, there is overall price parity in most Pakistani cities, with Lahore and Karachi espousing similar trends as Sindh.
Import prices in New York also edged up on January 29 by as much as 6 U.S. cents per pound. This hike led to further scrabble by spinners for domestic suppliers within Pakistan instead of imports. It is not yet clear if this may yet again hike local raw cotton wholesale prices.
Yarn, on the other hand, continues to be under pressure due to high energy expenditure. However, the government of Pakistan has announced a reduction in electric tariff charges by 5 U.S. cents. It is not yet clear when this will come into effect.
Pakistan ranks as the fifth importer of cotton worldwide and the 36th biggest exporter, per 2021 statistics.
The U.S. Department of Agriculture (USDA) predicted in 2022 that Pakistani cotton use would grow by 2% in 2023.