KARACHI: The Karachi Cotton Exchange (KCE) spot rate jumped Rs200 to Rs7,000 per 37.324kg on Friday as international prices firmed up on fear of rains damaging the crop in Pakistan, the world’s fourth largest producer, traders said.
The prices have been on a steady rise since the market opened on Monday after Eid holidays because heavy monsoon rains have hurt the crop in southern Sindh, they said.
“There were hardly any deals in Sindh. All the deals took place in Punjab,” said Shakeel Ahmed Khilji, a cotton broker. “We can’t say anything about the damage yet. It would be mere speculation. But I am sure production from Sindh will be flat at around 4 million bales.”
Before the floods, Pakistan was expected to produce a record crop of 15 million bales. Each bale has 170kgs. Sindh produced 4.2 million bales last year.
Ginning factories in Sindh have been shut as seed-cotton (phutti) cannot be transported.
Khilji said that use of BT Cotton has increased the yield and even if a few parts are damaged, the output will remain almost the same. “This is not a crisis like we faced last year when floods devastated the main producing fields in Punjab.”
Fears of shortages and hike in New York benchmark cotton jacked up the prices to record highs of around Rs13,000 earlier in the year. The prices then fell gradually to reach Rs5,500.
Rains have submerged farmland in Thatta, Badin, Umerkot, Sanghar and adjoining districts of Sindh. Traders believe seed-cotton will start arriving from these areas once water recedes, which is likely in a few days.
Parts of upper Sindh including Moro, Naushero Feroz, Ghotki and Sukkur remained unhurt by rains.
There are no concrete figures available for the size of cotton that has been damaged in floods. But even if Pakistan loses a million bales, the country’s overall produce will not fall below 14 million bales and will be nearly enough to meet the demand of local textile makers.