The local cotton market is experiencing a bullish trend, with white lint prices reaching a record high of Rs20,000 per maund on Thursday for the current season.
Meanwhile, the Federal Board of Revenue (FBR) has scheduled a special meeting for Monday to discuss the continuation of sales tax exemptions on imported cotton and yarn.
The rise in local cotton prices is attributed to unexpected delays in the arrival of imported yarn, a significant reduction in domestic crop production, and large export orders from the textile sector.
Domestic cotton production has fallen short of the projected target by 51% and 32% compared to last year’s output.
While the textile industry has secured large export orders, reports indicate that imported cotton shipments, initially expected to arrive in March, have now been delayed until May.
These factors have driven up local cotton prices as the textile industry has been increasingly purchasing domestic lint.
Cotton prices for one-month deferred payments have reached Rs20,000 per maund, while for routine payments, prices are ranging between Rs19,000 and Rs19,500 per maund. Market analysts predict further price increases.
Cotton Ginners Forum Chairman Ihsanul Haq explained that the delay in cotton imports was due to the Brazilian authorities’ failure to conduct timely fumigation of their cotton, with some suggesting that the country faced a shortage of the chemical required for fumigation.
In response to the situation, Prime Minister Shehbaz Sharif has instructed the FBR to hold an important meeting on January 13, where a decision will be made regarding the continuation of the 18% sales tax exemption for imported cotton and yarn. This directive followed appeals from cotton growers and ginners who raised concerns about the disparity between local and imported cotton prices.
