Karachi: International and domestic cotton prices have experienced significant declines, offering potential cost savings for textile millers amid various market pressures. Globally, cotton prices fell by 9% month-over-month and 14% since the beginning of the year, now trading at approximately $0.69 per pound. This drop is largely attributed to increased production and export estimates from Brazil, which has overtaken the USA as the leading exporter of cotton. In Pakistan, cotton prices have decreased by 4% month-over-month to about $0.82 per pound, representing a slight decrease of 1% year-to-date but a substantial 20% drop from its February peak.

According to JS Global, the decline in U.S. cotton prices followed suit, with the USDA revising its 2024-25 season average farm price from $0.70 to $0.68 per pound. The adjustment reflects broader market trends and may influence global pricing strategies. Locally, the PCGA reported that cotton arrivals for the first half of July were significantly lower than last year, with only 0.4 million bales compared to 0.8 million, indicating the beginning of the domestic cotton season.

The forecast suggests that cotton prices might recover as industrial activities increase, but the global decrease is expected to moderate local prices and potentially yarn prices. This softening of prices should help relieve some of the financial pressures faced by textile manufacturers, who are dealing with rising energy and financing costs, along with recent tax increases. However, if local cotton prices fail to align with international trends quickly due to supply constraints, the disparity could negatively impact the profitability of the spinning segment.