The price of unginned cotton surged to a new record of Rs 8,000 per maund last week, due to heavy purchasing by spinners and exporters in anticipation of cotton shortage.
Cotton growers are, currently, holding back stocks of raw cotton to obtain greater prices amidst ambiguity regarding the crop size, which accelerated heavy cotton purchasing by spinners as well as exporters to secure their standing in the market.
The cotton growers of Pakistan had been so far having a sway over the market, with the expectation of acquiring a higher price which is equivalent to the price existing in the New York Cotton Exchange (NYCE).
Strong Chinese demand for cotton and yarn has been also forcing the global cotton prices to rise. Though India has excess cotton which can be exported but it has currently decided to hold back its stocks, which have led to heavy purchasing of cotton in the local as well as global market.
A number of small and medium-sized factories might succumb to the challenges and close down, as huge financial assistance is required for securing the raw material.
The spot rates have increased to Rs 8,318 per 40 kg of cotton at the Karachi Cotton Association. There has been an addition of Rs 107 to the earlier rates.
Fibre2fashion News Desk-India
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