Imports By Pakistan Help Cut Cotton Surplus

Imports By Pakistan Help Cut Cotton Surplus

Pakistan is buying more cotton than expected from India, opening an opportunity for the world’s biggest producer to offload its massive stockpiles, according to a report.

India has struggled to find buyers over the past year after the world’s top cotton consumer China cut import quotas to stimulate demand for its own fibre. The problem has been further exacerbated by near record high Indian output.

But the recent flurry of purchases by Pakistan has pushed up cotton prices in India to more than the Minimum Support Price (MSP) in most regions, reducing the pressure on the government to buy from distressed farmers.

India has contracted to export two million bales in the marketing year that started on October 1, with Pakistan buying half of that. Typically, China would account for more than 50 per cent of India’s shipments.

“We were not expecting such kind of demand from Pakistan,” Cotton Association of India President, Dhiren Sheth said. “Pakistan could buy another 500,000 to 700,000 bales.”

According to industry sources, total cotton imports by Pakistan will more than triple this marketing year, with India cornering a major share given lower transportation costs.

“Due to lower freight, India is the first choice for buyers in Pakistan,” Shahzad Ali Khan, chairman of Pakistan Cotton Ginner’s Association said.

Pakistan’s overall cotton imports are seen climbing to at least four million bales in the year that started on August 1, from 1.2 million bales a year ago, Saleem Saleh, acting secretary general of All Pakistan Textile Mills Association said.

Its cotton output is expected to drop 25 per cent to 11.4 million bales in 2015, the lowest since 2003, he added.