Cotton Market Update

Previously, I had put a relatively higher figure of Rs. 13000/maund for Pakistani Cotton price to be realised by March 2011 but the cash market of Cotton in Pakistan this past week has already seen considerable business over 13k mark. The market has a confirmed deal known to have realised at Rs. 13,800/maund for payment terms 30 days l/c and mind you we’re still 10 days away from the start of March).

So if we just take the cash price at Rs. 13,500/maund we have a figure of $ 1.90/lb+ price for Pakistani Cotton and domestic mills are willingly buying at these prices as supply situation is tight and will remain tight by probably the middle of next crop year as there are hardly any chances of unsold stocks left and in fact we are in deficit. Gone are the days when one could buy $ 1/lb for a dozen hand towels pack from Pakistan. Now even the cotton comber noil from Pakistan is sold at $ 1.60+/lb FOB Pakistan.

I wish if Pakistan can put some extra effort in increasing its cotton crop size to at least reach the domestic usage figure of 15 million+ bales, we all can have a great time fetching good profits on our efforts of conversion. As according to estimates in order to have ending stocks equal to 2008 levels, the world will have to produce max cotton outputs for next five years consecutively and yesterday there was some news about China facing massive drought conditions in major agricultural areas so chances doesn’t look too bright.

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