Pakistan remains top US cotton buyer despite local price slump

Pakistan remained the largest buyer of US cotton for the second consecutive week, purchasing 68,030 bales out of 112,000 bales sold by the United States, as domestic cotton and phutti prices fell sharply during the Eidul Azha holidays.

Despite lower local prices, textile mills continued to rely on imported cotton because of declining domestic stocks. Mills are also importing cotton from Brazil in substantial quantities.

Cotton prices in Sindh dropped by Rs2,000 per maund to Rs21,000 per maund during the holiday period, while prices in Punjab fell by Rs1,000 per maund to Rs22,000 per maund.

Phutti prices also declined by Rs1,500 per maund to Rs10,500 per 40 kilograms. Market experts fear further decline in prices in the coming days.

Chairman of the Cotton Ginners Forum Ihsanul Haq said Punjab’s new tax on the transportation of cotton and phutti from Sindh had widened the price gap between the two provinces, making cotton costlier in Punjab than in Sindh.

The decline in domestic prices has come as international cotton markets also face pressure. Global cotton prices have fallen by as much as 10 cents per pound over the past few days, adding pressure on Pakistan’s cotton market.

Industry representatives say Pakistan’s cotton and textile sectors are facing high taxes, electricity and gas tariffs, financing costs and the recently imposed super tax on large industries.

According to Ihsanul Haq, around 500 cotton ginning factories and more than 150 textile mills across the country have either closed completely or are operating below capacity.

Industry bodies, including the All Pakistan Textile Mills Association (APTMA) and the Pakistan Cotton Ginners Association (PCGA), have urged the federal and provincial governments to reduce taxes, energy tariffs and interest rates in the upcoming budgets.

They warned that the industry could face bankruptcies if immediate relief is not provided.

Exporters have also asked the federal government to restore the previous final tax regime by treating tax deducted on export proceeds as the final tax liability of exporters.

They said restoration of the regime would support exports and reduce tax-related complications for the sector.

The situation in Pakistan contrasts with India, which has abolished all taxes and duties on imported cotton from June 1 to October 31. India’s decision includes removal of the cumulative 11% import duty and Agriculture Infrastructure and Development Cess on imported cotton.