Weekly Cotton Review: As new crop season opens on a bearish note, rates have fallen significantly
KARACHI: The new cotton crop season for 2026-27 has opened with a significant bearish trend in prices, with market rates falling by as much as 1,500 rupees per maund.
The decline has raised fresh concerns among growers, ginners, and industry stakeholders who are already grappling with a prolonged crisis in the cotton sector.
According to market sources, only around 15 ginning factories are expected to commence partial operations by June 15, reflecting the sluggish pace at which the new season is unfolding.
International markets have offered little comfort, as New York cotton futures have also recorded a notable decline, further dampening sentiment among domestic traders and exporters.
The persistent fall in local cotton production has left textile mills with no option but to turn increasingly to imported cotton to meet their raw material requirements, a trend that has placed additional strain on the country’s foreign exchange reserves. The growing dependence on imported cotton has also contributed to a steady rise in edible oil imports, compounding the economic burden on an already stressed trade balance.
Industry observers have pointed to a troubling pattern that repeats itself every year without fail. Before each new cotton season begins, widespread calls for the revival and restoration of the cotton industry are heard from all corners, yet once the season is underway, the same story of decline and neglect emerges.
What lies at the root of this recurring failure remains a question that neither policymakers nor industry leaders have been able to answer convincingly.
The Pakistan Cotton Ginners Association has formally petitioned the government to address the excessive and overlapping taxes imposed on ginning factories, warning that the financial burden is making it increasingly difficult for ginners to sustain their operations.
The association has urged the authorities to provide meaningful relief to the ginning sector, which plays a central role in the cotton supply chain.
Prominent industrialist Khurram Mukhtar has added his voice to the growing chorus of concern, calling on the government to abandon its current policy of targeting textile exporters through punitive measures.
He argued that such an approach is directly undermining Pakistan’s export competitiveness and warned that continued pressure on textile exporters would have long-term consequences for the country’s industrial base and foreign exchange earnings.
Experts have also drawn attention to a structural problem that has been quietly eroding cotton production for years. The establishment of sugar mills in regions that were traditionally dedicated to cotton cultivation has significantly reduced the area under cotton, as farmers shift toward sugarcane due to more attractive returns and guaranteed procurement.
Analysts have stressed that the government must take this issue seriously and intervene with a clear and coherent policy to protect cotton-growing areas and restore confidence among farmers before the damage becomes irreversible.
Following the Eid ul-Adha holidays, trading partially resumed in the local cotton market, where prices recorded a significant decline of Rs 1,500 per maund. Cotton was traded at Rs 21,600 per maund, compared to the previous rate of Rs 23,000 per maund.
Approximately 2,000 bales were traded at Rs 21,600 to Rs 21,800 per maund on the condition of delivery by June 3. In addition to cotton, Phutti prices also fell by approximately Rs 1,000 to Rs 1,500 per 40 kilograms, while Binola rates likewise experienced a decline.
According to market sources, around 10 ginning factories in Sindh province are expected to partially resume operations by June 15, signalling a gradual revival of cotton processing activity in the region.
The downward trend in cotton prices is not limited to the domestic market, as international cotton markets are also witnessing a similar decline. New York cotton futures have dropped to between 76 and 78 US cents per pound.
Textile mills have stated that the current price of cotton yarn justifies a cotton price in the range of Rs 18,500 to Rs 19,000 per maund. Based on this assessment, domestic cotton rates could potentially fall further to around Rs 20,000 per maund in the near future.
A persistent and alarming decline in cotton production has forced textile mills to rely heavily on imported cotton, while the import of edible oil has also increased as a consequence.
Every year, before the new cotton season begins, calls for cotton revival echo from all quarters, yet once the season unfolds, the crop’s deteriorating condition tells an entirely different story. The reasons behind this recurring failure remain difficult to comprehend.
The Pakistan Cotton Ginners Association (PCGA) has consistently raised its voice against the heavy burden of taxes imposed on ginning factories. This year as well, PCGA Chairman Sham Lal Manglani, along with his delegation, met with Finance Minister Muhammad Aurangzeb and formally requested a review of the taxes levied on ginners. It is hoped that the federal budget, scheduled to be presented on June 5, may include positive measures to address this longstanding concern.
In the province of Sindh, cotton prices for the new crop have seen a notable decline. Lint cotton is currently trading at Rs. 21,600 to Rs. 21,800 per maund, while Phutti prices have also dropped, now ranging between Rs. 10,500 and Rs. 11,000 per 40 kilograms. Banola prices have similarly witnessed a downward trend.
The Evacuee Trust Property Board (ETPB) has been in occupation of the Cotton Exchange building since December 12, 2025, with the assistance of the Federal Investigation Agency (FIA). As a direct consequence of this takeover, the critically important Daily Cotton Spot Rate has not been able to be issued, causing serious disruption to the cotton trade.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, stated that international cotton prices have witnessed a significant decline. New York cotton futures have dropped to a low of 75 to 76 US cents per pound, reflecting growing bearish pressure in global markets.
Adding to the industry’s woes, the government’s policies are being seen as detrimental to cotton cultivation. Sugar mills are being rapidly established in cotton-growing zones, particularly in Rahim Yar Khan, raising serious concerns among cotton stakeholders about the future of the crop in these regions.
Pakistan’s cotton production has already fallen to an alarmingly low level of 5.5 million bales, down from a previous figure of 1.5 million bales higher, marking a deeply worrying decline.
Farmers are increasingly abandoning cotton cultivation, opting instead to sow sugarcane, which is seen as a more profitable alternative under current conditions. Industry experts warn that if this trend continues unchecked, cotton output will decline even further, dealing a severe blow to Pakistan’s textile sector and overall agricultural economy.
As cotton production continues to fall across Pakistan, ginning factories are gradually shutting down. Cotton factories near major cities are being converted into residential plots, and agricultural land on the outskirts of urban areas is increasingly being taken over by housing societies.
According to ginners, soaring energy prices and an excessive tax burden imposed by the government on ginning factories have made it virtually impossible to keep operations running.
In a deeply troubling development, the Federal Investigation Agency (FIA) has illegally occupied the Cotton Exchange Building — a historic landmark of Pakistan’s cotton trade, established in 1936.
The Sindh High Court had explicitly barred FIA personnel from entering the premises until a court verdict is issued, yet in defiance of this judicial order, FIA officials broke into the offices of 320 registered cotton brokers, seized their property, and took unlawful possession of their workplaces. Such a blatant disregard for justice is virtually unheard of anywhere in the world.
The cotton brokers have been left utterly helpless — robbed of their livelihoods and denied even the right to grieve. They have no one to turn to for justice.
What is equally alarming is the silence of major industrial and trade bodies, including PCBA, PCGA, FPCCI, KCCI, and APTMA, all of which remain passive spectators in this crisis. Notably, several affected brokers from the Karachi Cotton Association (KCA) are registered members of both KCCI and FPCCI. Their members are suffering open injustice, yet these influential institutions have offered no support whatsoever. The question demands an answer: why? Someone must come forward to address this injustice.
Adding to the woes of the cotton sector, a building constructed in 1970 specifically for cotton research is now being converted into a gymnasium. Earlier, the historic PCRI Heritage building on Cones Road in Karachi a structure that predates the founding of Pakistan was demolished. KCA’s cotton warehouses were also forcibly seized at gunpoint, and in their place, the American Embassy was established, which now stands on what was once Mai Kolachi.
Furthermore, due to the government’s flawed policies, the textile sector — the country’s largest earner of foreign exchange and its biggest source of employment — is being pushed to the brink of collapse. According to APTMA, between 150 and 200 textile mills have already shut down, with several others on the verge of closure.
Meanwhile, Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association, has warned that if the policy of targeting textile exporters is not reversed, the sector which plays a vital role in earning foreign exchange, generating employment, and contributing to economic stability will face complete destruction.
He noted that Pakistan’s textile sector possesses surplus industrial capacity, entrepreneurial strength, and the ability to access global markets, adding that if a supportive ecosystem is provided, exports could increase by four to five billion dollars in a short period of time.
Copyright Business Recorder, 2026