Advance cotton deals begin at record prices ahead of new crop arrival

LAHORE: Advance trading in Pakistan’s new cottonseed crop has started at unprecedented rates, with early deals indicating a strong rise in the market before the fresh crop reaches ginning factories.

According to market sources, the first forward transaction for the new crop was finalised on Monday between a trader in Tando Bago and a ginning unit in Khanewal. The deal covered four truckloads of phutti at Rs10,000 per 40kg for delivery between May 15 and May 25.

In another advance transaction, a ginning factory based in Sanghar sold 200 bales of new crop lint at Rs21,700 per maund for delivery on May 20.

A major trader has also added to the market’s momentum by offering to buy unlimited quantities of the new crop at Rs9,200 per 40kg in Sanghar and Rs10,000 per 40kg in Khanewal for the same mid-May delivery period.

Prices rise as market turns bullish

Cotton Ginners Forum Chairman Ihsanul Haq said the sudden increase in advance trading came after lint prices climbed by Rs3,500 per maund over the last one to one-and-a-half months. He said this had taken lint prices to a two-year high of Rs20,000 per maund, prompting expectations of further gains and encouraging aggressive forward buying.

Market participants expect additional deals to be concluded in the coming days, possibly at higher prices, as concerns over supply continue to support the market.

Rainfall and import disruption tighten supply

One factor behind the sharp increase in prices is continuing rainfall in cotton-growing areas, which is expected to delay the arrival of the new crop.

Another reason cited for the tightening market is the near suspension of cotton imports into Pakistan for almost two months because of the Gulf conflict. This has added to supply pressure in the domestic market.

However, there is also a possibility that prices may stabilise or move lower if ongoing talks between Pakistan and Afghanistan in China lead to the reopening of cotton imports from Afghanistan.

Afghanistan currently has between 250,000 and 300,000 bales of cotton in stock. If trade resumes, those supplies could be sent entirely to Pakistan.

For now, the cotton market remains firmly bullish, with traders expecting further increases in advance prices for both phutti and lint in the days ahead.