Reports indicate that India is likely to cancel Pakistani cotton import orders after the fiber’s price surged well above the rate the two countries had previously agreed on.
Although Pakistan recently placed an order to buy 65,000 bales from India at a price ranging from 70 to 76 cents per pound, the commodity’s price has spiked to 85 cents per pound in recent days.
India has already delivered some of the agreed upon cotton to Pakistan, but it has since stopped the deliveries to get the benefit of the global price hike, says Shakeel Ahmed Khiji, broker at the Karachi Cotton Exchange (KCE).
Furthermore, the Pakistani domestic market saw no trading on Monday as mill owners refused to pay the high price for the fiber.
According to KCE brokers, ginners were charging much higher prices for the commodity after the Pakistan Cotton Ginners’ Association reported a decline of 1.60 million bales to 12.76 million bales during the period from July 1, 2012 to February 28, 2013 against 14.37 million bales produced in the same period last fiscal year.