Cotton is the backbone of Pakistan’s economy. Cotton and allied cotton products account for about 65 percent of the country’s export earnings and add over 10 percent of the country’s GDP. The extraordinary fluctuation was seen in the international commodities market due to the war between Russia and Ukraine. Under the influence of the international market, the fluctuation was also seen in the local cotton market. During the last week, a bearish trend was witnessed in Pakistan’s local cotton market. Mills were hesitant to buy cotton at high rates due to the disparity between cotton and cotton yarn. As a result, trading volume was seen decreasing.
During the last week, trading volume was meager, and if there was some trading, it was on borrowing. It looks that there will be no businesses in the coming days because of the war between Russia and Ukraine. The effects of this war are seen on the whole world, but the global commodity markets are badly affected, including cotton.
The rates of cotton in Brazil, Central Asia, Africa, and Australia remained stable, but there was a panic in the market due to the Russia- Ukraine war. The cotton market in India witnessed a bearish trend because according to the Cotton Association of India, there will be a decline of 5 lac bales in cotton production. However, cotton prices skyrocketed in Pakistan as the government imposed a 17% sales tax on cotton-related items. One wonders that in these circumstances how the cotton production will increase.
The good news for Pakistan is that Punjab sees an increase in cotton acreage after a decade. Cotton crop may see its area increasing for the first time in the last decade this year in Punjab as its sowing starts and competing crops, especially maize, lose their economic sheen, claim farmers who abandoned the crop a few years back. Return of cotton is in the air, in all areas of central Punjab, and the farmers are counting the benefits as well, some of them very valid ones. Nevertheless, much of this optimism translates into acres on the ground is more guesswork.
During the last week, trading volume was meager, and if there was some trading, it was on borrowing. It looks that there will be no businesses in the coming days because of the war between Russia and Ukraine. The effects of this war are seen on the whole world, but the global commodity markets are badly affected, including cotton.
The rates of cotton in Brazil, Central Asia, Africa, and Australia remained stable, but there was a panic in the market due to the Russia- Ukraine war. The cotton market in India witnessed a bearish trend because according to the Cotton Association of India, there will be a decline of 5 lac bales in cotton production. However, cotton prices skyrocketed in Pakistan as the government imposed a 17% sales tax on cotton-related items. One wonders that in these circumstances how the cotton production will increase.
The good news for Pakistan is that Punjab sees an increase in cotton acreage after a decade. Cotton crop may see its area increasing for the first time in the last decade this year in Punjab as its sowing starts and competing crops, especially maize, lose their economic sheen, claim farmers who abandoned the crop a few years back. Return of cotton is in the air, in all areas of central Punjab, and the farmers are counting the benefits as well, some of them very valid ones. Nevertheless, much of this optimism translates into acres on the ground is more guesswork.