Cotton Market Faces Pressure Amid Textile Woes and Holiday Season Ahead

Web DeskDecember 2, 2023
Cotton Market Faces Pressure Amid Textile Woes and Holiday Season Ahead

Cotton spot prices in Pakistan have experienced a decline of Rs. 500 within a week, dropping from Rs. 17,500 to Rs. 17,000 per maund. This decrease is attributed to a sluggish demand and an abundant supply of both domestic and Afghan cotton.

The Karachi Cotton Association maintained spot prices at Rs. 17,000 per maund on Friday, following a reduction of Rs. 200 on Thursday.

Phutti prices across Punjab had previously decreased by Rs. 600 to Rs. 800 in the preceding weeks but saw a marginal recovery during the current week. Prices in various regions, including Bahawalpur, Bahawalnagar, Jhang, Multan, Faisalabad, Kasur, and Toba Tek Singh, have shown fluctuations, with some areas experiencing an increase of nearly Rs. 200 compared to the previous week.

Also Read: Local University Produces Organic Cotton in Karachi for the first time

Traders have noted an unusual phenomenon where Phutti prices are moving opposite to spot prices. This is attributed to the lower quality of cotton and a lack of buyers, while Phutti remains steady due to the last pickings and limited availability in the market, with farmers anticipating a reversal in demand.

Rashid Khan, a commodity trader and Head of Sales at Fund Marketing International, highlighted weak demand in the market, influenced not only by gas price hikes but also by the availability of Afghan cotton offered at approximately Rs. 16,800 per maund. He emphasized the slow business atmosphere in the US and EU, which is contributing to sluggish demand, particularly during the upcoming holiday season.

While textile exports showed a 5 percent year-on-year rise in October 2023, reaching $1.43 billion, concerns exist about the long-term outlook for the industry. The recent increase in gas prices, coupled with the removal of regionally competitive energy tariffs, has led to protests from textile millers and manufacturers.

On the international front, there are unconfirmed reports suggesting that China has halted its purchases of coarse count cotton, resulting in elevated inventories in Pakistan. The Chinese cotton market is under pressure due to new crop arrivals, restrictions on exporting cotton to the USA and EU, and alleged human rights issues in Xinjiang.

In the United States, holiday sales are expected to rise by 3 percent to 4 percent compared to the previous year, reaching an estimated range of $957.3 billion to $966.6 billion, according to the National Retail Federation (NRF). The commodities market, including cotton futures, remains influenced by factors such as OPEC intervention in the oil market and dynamic shifts in crude oil cuts. Cotton futures are steady at around $0.79, with the United States achieving a 66 percent commitment level in line with their target for the current marketing year.

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