Cotton exporters shift focus on local market
By Imran Ayub
KARACHI: Cotton exporters have stopped doing business in foreign markets in order to capitalise the sudden and sharp demand of the commodity at the local market, it is learnt.
Rising local demand of cotton has prompted them to shift their focus from cheaper exports to promising local market where cotton prices have shot up significantly.
The cotton exporters, who have managed to sell over 650,000 bales this fiscal, said the international market is offering much cheaper rates compared to local one, which pushed them to stop further booking of orders from abroad.
“The export season is almost over,” said Anwar Yasin, a trader and director Karachi Cotton Association. “Now the traders are focussing on local market which are offering much better prices as the textile mills need ever-high cotton to consume this year.”
He said for the current financial year the exporters shipped total 680,000 bales mainly to South East Asian countries on lower prices due to bumper crop across the world.
Record production of the cotton bales and lower prices earlier this year attracted international buyers of Pakistani cotton, which crossed record 15 million bales production this season.
However, the recent rise in local demand of the commodity have pushed almost all the traders to wrap up export operations and focus on local market, which is currently offering the highest per maund prices of the year.
“The cotton market always moves on technical reasons,” said Ghulam Rabbani, a local trader. “Currently the local consumption is on ever high mark and the situation has motivated millers for even import. So this is the best chance for the traders to make good deals with the local buyers.” He said currently country was facing shortage of cotton supply as the Trading Corporation of Pakistan (TCP) had stocked in 1.6 million bales and not decided its fate yet.
Ever-high crop and declining prices pushed the state-run TCP to intervene into the local market last year, to stabilise the prices. The TCP, which bought cotton from ginneries at Rs 2,159 per maund, has total lifted 1.6 million bales. The traders say uncertain plan of the TCP regarding sales of the stored 1.6 million bales created demand-supply gap and encouraged them to sell their product to local market and book profit.
“Currently the international market is offering 47 cents on per pound cotton,” said Sohail Naseem, vice chairman KCA. “And at the same time we are getting 50 cents of the same quantity locally so no one would go for more exports.” He said the per maund prices of the cotton crossed Rs 2,300 mark during last one month, which saw lower than Rs 2,000 level at the start of the trading season.
“But if the TCP offloads its stocked bales it may stabilise the local market prices,” said Mr Naseem. “But if the situation continues the market may see further rise in the prices in the days to come.”