Pak cotton prices plummet amid global economic downturn in Karachi.
The textile sector will benefit from low cotton prices, but farmers will also likely suffer further consequences because their remaining crop does not offer enough protection against the recent losses.
Insight Securities Textile Analyst Ali Asif stated in a statement that “recently, cotton prices have struck a 22-month low, mostly due to decreasing demand led by inflationary pressure globally.”
Furthermore, the cotton market’s imbalance between supply and demand has made worse increased yield output. We think that declining cotton prices and fewer orders are likely to keep pressure on the textile industry, he added.
“The overall slowdown in the global economy, monetary tightening in developing and emerging countries, along with lower demand in the major export markets including the US.
The European Union (EU), and China, are the main reasons for the rapid decline in global cotton prices,” said Tahir Abbas, Head of Research at Arif Habib Limited (AHL).
According to material examiner Arsalan Hanif, the decline in cotton prices is the result of a global slump in demand for cotton garments and yarn. Arsalan Hanif also acknowledges that the trend may continue.
Due to recession fears, Covid limits in China, interest rate increases, and rising inflation that has damaged consumers’ purchasing power parity, this downward trend is expected to endure for the upcoming several months.
Benefit from the Fall in Cotton Price.
However, he made sure to point out that “those who make value-added clothing benefit from the fall in cotton prices, while farmers suffer.”
The cotton market is currently in a pessimistic trend as a result of the recent Chinese lockdowns brought on by the new corona version and the rise in US interest rates.
According to Abdullah Umer Khan Lodhi, an agriculture analyst at Ismail Iqbal Securities. Due to Christmas, the worldwide market will stabilize in December, increasing demand for clothes globally.
According to Ahsan Mehanti, CEO of Arif Habib Commodities, “cotton is plunging dramatically due to the surging dollar and the possibility of a US recession.”
Because of the weak rupee and the impaired supply as a result of the reduced cotton crop, local prices have increased. Affordable pricing will enable value-added firms to import goods at low costs, while reduced crop volumes have hurt farmers this season.
Nasim Usman, a cotton market analyst, explained the dilemma currently facing the textile industry by saying, “The lowering global prices have been a blessing to export industries that can now import cotton at significantly lower costs.
Mills are interested in ordering cotton from abroad during the price of a cotton drop in the global market, but there is a crisis in every industry associated with the cotton and textile sectors as a result of the downward trend in the local and global textile market.
