Weekly Cotton Review: Market turbulent as new crop settles at Rs23,000/maund

KARACHI: Pakistan’s cotton market is navigating a turbulent phase as new crop cotton prices settle at Rs 23,000 per maund, with Phutti trading between Rs 11,000 and Rs 12,000 per 40 kilograms and cottonseed fetching Rs. 4,500 to Rs 5,000 per maund. The 2025-26 cotton crop has nearly concluded, leaving the industry to contend with a challenging outlook for the season ahead.

Global market pressures are compounding domestic difficulties. New York cotton futures have plunged to a critically low range of 77.78 to 80.50 US cents per pound, and analysts expect this international slump to drag local cotton prices further downward in the near term.

Adding to the sector’s woes, the government’s decision to permit sugar mills to operate within traditional cotton-growing zones has triggered strong opposition from cotton ginners, who warn that the move threatens to permanently displace cotton cultivation from its core agricultural belt.

On the policy front, a cotton revival roadmap approved by a committee headed by Deputy Prime Minister Ishaq Dar has made little progress, remaining effectively stalled despite formal approval. APTMA Chairman Kamran Arshad has written directly to the Prime Minister, urging the government to break the deadlock and translate policy commitments into concrete action. Industry veterans have pointed to a troubling pattern that repeats itself every season, where ambitious revival rhetoric gives way to deeper decline once the crop cycle begins, a contradiction they describe as both frustrating and difficult to explain.

In Islamabad, a high-level industry delegation led by PCGA Chairman Sham Lal Manglani and FPCCI President Atif Ikram Sheikh met Finance Minister Muhammad Aurangzeb to present the sector’s grievances. The delegation demanded the immediate removal of the 18 percent sales tax on cotton, cottonseed, and oil cake, cautioning that failure to act could put Pakistan’s ten billion dollar textile export industry at serious risk. The delegation also called for scrapping a proposed gymkhana club on land belonging to the Central Cotton Research Institute in Multan and demanded the recovery of the century-old Karachi Cotton Exchange building from what it termed the unlawful occupation of the Federal Investigation Agency. With domestic production under strain, industry experts warn that cotton imports are set to rise significantly, further straining the country’s foreign exchange reserves and weakening the competitive position of Pakistan’s textile sector.

The local cotton market is experiencing a sharp price surge as stocks have been nearly exhausted, plunging several textile mills into a state of acute crisis. With cotton supplies running critically low, many mills have been forced to increase their reliance on polyester as an alternative raw material. Mills that still retain cotton reserves, however, are capitalizing on the situation by selling yarn at premium prices.

Industry sources indicate that the new cotton season will require approximately two more months before it can operate at full capacity. While some ginning factories are expected to resume operations on early-picked cotton, production output will remain far too insufficient to meet industry demand. Experts anticipate that cotton prices will remain high in the early stages of the new season, with only a gradual decline expected over time.

Current market data reflects the severity of the supply crunch. Cotton is presently trading at 23,000 rupees per unit, while raw unginned cotton, locally known as phutti, is being sold between 11,500 and 12,000 rupees per 40 kilograms. Cottonseed, binola, has reached up to 5,000 rupees per maund. Textile mills report that cotton yarn prices have climbed to between 18,500 and 19,000 rupees.

The broader economic environment is compounding the industry’s difficulties. Textile mills are already struggling under the weight of prohibitively high energy costs, an overwhelming tax burden, and the looming threat of further interest rate hikes. Adding to these pressures, the International Monetary Fund has reportedly demanded that petroleum product levies be increased to as high as 17.7 billion rupees, a figure confirmed by the Prime Minister himself.

Industry stakeholders are now openly questioning how textile mills can sustain operations under such conditions. Mills holding stocks of imported cotton may weather the current storm with relative stability, but the outlook for the remaining mills is bleak, raising serious concerns about the long-term viability of the sector.

Pakistan’s cotton sector continues to face deep-rooted structural challenges as the annual cycle of revival promises gives way to yet another season of stagnation and decline. Industry observers note that each year, ahead of the new cotton season, widespread calls for the crop’s restoration dominate public discourse, only to be followed by the same pattern of underperformance and neglect, a contradiction that remains largely unexplained.

A significant driver of cotton’s declining footprint is the steadily growing influence of the sugar mafia, which has been systematically converting cotton-growing land to sugarcane cultivation. Farmers across the cotton belt are increasingly abandoning the white crop in favour of sugarcane, citing stronger market returns as the primary motivation. The trend has accelerated in recent seasons, with sugarcane gradually consuming the acreage traditionally reserved for cotton.

Adding to the sector’s woes is an ongoing legal and administrative dispute surrounding the Karachi Cotton Exchange building. The Federal Investigation Agency, reportedly acting in coordination with the Evacuee Trust Property Board, has allegedly occupied the KCE premises without lawful authority for the past six months. With the case still actively being heard before the Sindh High Court and no verdict yet delivered, the occupation remains legally unresolved. The fallout has been immediate and damaging. The daily cotton spot rate, a market-critical indicator relied upon by traders, ginners and farmers alike, has been suspended throughout this period, leaving the industry without a key pricing benchmark.

On the trading floor, cotton supplies in Sindh remain thin, with the available stock changing hands at Rs. 22,000 to Rs. 23,000 per maund depending on quality and payment terms. New season transactions have already been reported at Rs. 23,000 per maund.

Phutti of 40 kilograms is fetching Rs. 11,500 to Rs. 12,000, while Banola is trading at Rs. 4,500 to Rs. 5,000 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman noted that international cotton prices remain volatile amid persisting Middle East tensions and have declined sharply to trade between 78 and 80 US cents per pound.

According to the latest weekly export and sales report from the United States Department of Agriculture, total sales for the 2025–26 marketing year stood at 131,800 bales. Pakistan led all purchasing nations with 65,300 bales, followed by Vietnam at 26,100 bales and Turkey at 20,100 bales.

For the 2026–27 marketing year, forward sales reached 216,000 bales in total, with Pakistan dominating purchases by securing 206,100 bales. Indonesia and Turkey each purchased 4,500 bales, placing them second and third respectively. Total exports during the reporting period amounted to 289,400 bales, with Vietnam absorbing the largest share at 110,800 bales. Turkey followed with imports of 28,700 bales, while Pakistan received 26,000 bales to rank third among importing nations.

The government’s approval of a new sugar mill in Rahim Yar Khan has sparked strong opposition from the Pakistan Cotton Ginners Association (PCGA), which has condemned the decision as a direct threat to the country’s cotton industry.

In a strongly worded letter addressed to the President, Prime Minister, Chairman Senate, Chief Minister, and federal and provincial ministers and officials, the PCGA warned that permitting a sugar mill in Rahim Yar Khan is tantamount to issuing a death warrant for cotton cultivation in the region.

The Senate Standing Committee took up the matter and convened a briefing, where former PCGA Chairman Sohail Mahmood Haral testified that the decision would spell the end of the cotton crop in the area. He pointed out that a previously established sugar mill in Rahim Yar Khan had already resulted in a fifty percent decline in cotton cultivation, and cautioned that allowing another such facility in the core cotton belt would constitute national suicide.

Haral called on the government to impose a complete ban on the establishment of new sugar mills in the core cotton zones of Rahim Yar Khan, Bahawalpur, Bahawalnagar, and Lodhran, urging that these districts be officially designated as no-sugar zones. He also highlighted the stark economic contrast between the two crops, noting that cotton generates one hundred and fifty dollars per acre for the national economy, compared to only fifty dollars per acre from sugarcane. The Senate Standing Committee has directed authorities to submit a report within fifteen days.

Industry observers have raised broader concerns about the government’s decision-making process, questioning why key stakeholders are consistently left out of consultations before major policy decisions are made. With the cotton crisis already worsening, critics warn that prioritising sugar mill expansion over cotton revival will deepen the economic challenges facing the agricultural sector rather than resolve them.

Pakistan’s powerful textile industry has launched a multi-front offensive against what it describes as systemic government failures, raising urgent concerns over cargo clearance bottlenecks at major ports, the collapse of a high-level cotton revival programme, the misappropriation of critical research land, and a looming billion-dollar cotton import bill that threatens to further destabilise the country’s already fragile foreign exchange reserves.

The All Pakistan Textile Mills Association has written directly to Prime Minister Shehbaz Sharif, demanding immediate intervention to stop what it calls irreversible financial damage caused by prolonged cargo clearance delays at Pakistani ports.

In the letter, APTMA Chairman Kamran Arshad acknowledged the government’s broader efforts to facilitate trade and promote industrial growth but warned that a deeply serious problem continues to devastate importers, exporters, and the wider business community. Commercial consignments, the letter explained, are routinely held up at ports due to policy decisions, regulatory complications, and administrative delays, after which port authorities and shipping lines impose heavy demurrage and detention charges on traders who bear no responsibility for those delays.

Copyright Business Recorder, 2026