Textile sector is in a panic like situation due to abnormal rise in Cotto, yarn and fabric prices. This panic is further supporting the upward march of prices.
Reasons behind the cotton prices rise.
USDA 1st Supply and Demand estimates showing around 2 million bales shortage initially but a lot of people think that in upcoming monthly reports this gap may widen. If this gap will widen then surely prices will move further higher. At that stage we may see some panic buying. This panic may guide the market to an abnormal and unacceptable position. So, this war is going to be fought between panic and patience.
Cotton Prices are expected to remain firm and upward in near future as Supply position is not good at the moment. USA cotton supply will also not improve before the new crop by November / December.
Sowing position of cotton in Pakistan also lower as compare to last year. Consumption projection for the Pakistan during the upcoming season is also reported higher. Therefore Pakistan cotton Prices for the New Crop started with a historic high level.
In India Government of India has increased the minimum support price to motivate the farmers for new sowing and at the same time CCI also increased the price of stocks lying with them which further strengthened the prices. As Indian cotton arrival starts from September so before that Indian Prices will remain firm. There are less chances of any decrease in prices before that.
Although there are some hopes from Australia as people expecting better crop. But Australian Cotton prices are always at higher level and would not put any major impact on prices.
Yarn and fabric prices are also following the above sentiments. Quotations of yarn and fabric from leading producing countries like India, Pakistan, China and Vietnam are also higher.