Weekly Cotton Review: FIA move invites sharp criticism

KARACHI: The Federal Investigation Agency (FIA) has allegedly taken over Pakistan’s historic Cotton Exchange Building with the apparent backing of the Evacuee Trust Property Board (ETPB) to establish its Karachi headquarters. The move has drawn sharp criticism from the building’s affectees, particularly because the matter is already subjudice before the Sindh High Court. Critics have termed the occupation unlawful and a blatant disregard for judicial proceedings. The fallout from this alleged seizure has been immediate and far-reaching. The daily cotton spot rate, a critical pricing benchmark for Pakistan’s domestic cotton trade, has remained suspended since December 12, 2025, leaving traders, ginners and farmers without an official price reference and pushing the entire cotton supply chain into a state of uncertainty. The domestic cotton market is already under considerable strain. Available stocks have dwindled to negligible levels, with whatever little remains changing hands at prices between Rs19, 500 and Rs21, 000 per maund. Despite the grim supply situation, early signs of activity in the new crop season have offered some relief to market participants. Future trading for the 2026-27 crop has begun on a partial basis, with Phutti deals of forty kilograms being settled at Rs10, 000 and ginned cotton fetching Rs21, 750 per maund, signalling cautious optimism among buyers and sellers alike. On the global front, international cotton markets are witnessing a strong bullish momentum. New York Cotton Futures have surged to hit the key target of 85 US cents, reflecting robust international demand and a tightening global supply outlook that could have significant implications for Pakistani exporters in the months ahead. Back home, the broader industrial landscape continues to present a challenging picture. Successive hikes in petroleum prices, electricity tariffs and gas charges, compounded by the State Bank of Pakistan’s decision to raise the benchmark interest rate, have taken a heavy toll on industrial output across the board. The textile sector, already navigating a difficult operating environment, has been among the hardest hit, with rising input costs squeezing profit margins and dampening production capacity. Against this backdrop of domestic challenges, Pakistan’s textile industry has managed to make its mark on the world stage. Pakistani exhibitors delivered a standout performance at the prestigious Techtextil and Texprocess international trade fairs, showcasing the sector’s technical capabilities and product diversity to a global audience. Cotton prices remained largely stable in the local market during the past week amid extremely thin trading activity. Although the current season has come to an end, very little stock remains, while reports are beginning to emerge about the partial arrival of new crop cotton. Some future contracts were settled at Rs 21, 750 per maund for cotton and Rs 10, 000 per 40 kilograms for Phutti. Tensions in the Middle East have created abnormal conditions in markets, particularly causing a sharp rise in energy prices whose negative effects are becoming visible across various commodities, including cotton. International cotton markets are also showing an upward trend in prices. Industrial production has been adversely affected by rising energy costs, including petroleum products, electricity and gas, as well as an increase in the State Bank’s policy rate. The textile sector has been among those bearing the brunt of these developments. Cotton prices are showing firmness globally. Drought conditions in the United States, combined with intense heat waves over cotton-growing regions in Pakistan and India, are pointing toward higher cotton prices in the new season. Production in Brazil also appears lower than expected, and reports from Africa are similarly discouraging. Market observers believe that cotton prices in Pakistan are likely to remain favourable. The Evacuee Trust Property Board (ETPB) has been in occupation of the Cotton Exchange building since December 12 with the assistance of the FIA, which has made it impossible to issue the daily cotton spot rate, a figure of considerable importance to the market. The small quantities of cotton still available in Sindh and Punjab are trading at between Rs 19, 500 and Rs 21, 000 per maund, depending on quality and condition. Karachi Cotton Brokers Forum Chairman Naseem Usman stated that international cotton markets are trending upward. New York cotton futures were quoted between 81. 85 and 84. 56 US cents per pound. According to the USDA weekly export and sales report, a total of 162, 900 bales were sold for the 2025-26 season. Vietnam led all buyers with purchases of 55, 600 bales, followed by Pakistan in second place with 33, 300 bales, and Honduras in third with 29, 700 bales. For the 2026-27 season, Turkey, China, Guatemala, Honduras and Pakistan collectively purchased approximately 105, 700 bales. Cotton prices continue to reach new highs, with the 85-cent target nearly achieved. Both July and December contracts closed near their weekly highs, signalling the possibility of a further bullish trend in the market. However, this sharp price surge is largely driven by supply concerns, particularly due to drought conditions in Brazil and the United States. Should weather conditions improve and rainfall occur, production could increase, potentially pulling prices down by around 500 points. The current rally is considered overly aggressive and difficult to sustain over the long term, though prices could still climb as high as 88 cents. Demand remains a weak factor in the market at present. Textile mills have not increased production, nor are they shifting from synthetic fibre to cotton, as consumer demand has shown no meaningful growth. The market is therefore entirely supply-driven at this stage. Furthermore, no major shift in the production season is expected, as planting has already begun in the Northern Hemisphere and the area under cultivation is largely fixed. Shortages of resources, seeds, financing, and machinery continue to hinder any expansion in cultivated acreage. Weather continues to dominate the market outlook. Prices may remain volatile within the 80 to 85 cent range. The narrowing price gap between old and new crop contracts suggests that this rally is being driven purely by seasonal factors rather than any fundamental shift in market dynamics. Since the United States and Brazil account for a significant share of global cotton trade, crop conditions in both countries will continue to influence market direction. Mills have stepped up price-fixing activity in recent weeks, which could provide some support to prices through May. Exports performed better than expected, pointing to a possible improvement in demand, though mills continue to report sluggish business activity. Pakistan’s textile sector demonstrated outstanding performance at the Techtextil and Texprocess 2026 exhibitions held in Frankfurt, Germany, successfully capturing the attention of international buyers. Pakistan’s participation was characterized by deep buyer interest in its products, active engagement, and a growing international reputation. The event brought together over 1, 700 exhibitors from 54 countries, reflecting the depth and diversity of the global textile industry. From established manufacturers to emerging players, participants presented new developments and practical solutions that highlighted steady industry growth and adaptability. Thousands of trade visitors, including buyers, industry professionals, and decision-makers, attended the exhibitions and actively interacted with exhibitors these engagements created valuable opportunities for networking, sourcing, and future business partnerships. The Trade Development Authority of Pakistan (TDAP) led a national pavilion featuring Sadaqat Limited, Haroon Fabrics, JK Spinning, and Ahmed Fine Weaving. Independent exhibitors, including Artistic Milliners, H Nizam Din & Sons, Master Textile, Sapphire Finishing, Nishat, Pakwinz International, and M Bilal Textiles, further strengthened Pakistan’s presence with a diverse product range. Mohd Noman Qadir, Export Manager at Pakwinz International, said the fair was highly productive, with strong orders from European buyers. He added that their presence in Germany aims to explore advanced technologies and European developments to help boost exports and support economic growth back home. Raheel Walani, Senior Manager Sales & Marketing at Art Mill said that the fair was very successful. The flow of visitors was strong, and they attracted buyers from many countries. He added that the company secured excellent business opportunities during the event. Copyright Business Recorder, 2026

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