The Southern India Mills' Association (SIMA) is advising mills to avoid panic buying of cotton as its price that was ruling around Rs 38,000 to Rs 39,000 per candy of 355 kgs during the beginning of the season for the benchmarked variety of Shankar-6, is currently ruling around Rs 43,500 to Rs 44,000 resulting in an increase of Rs 5,000 to Rs 6,000.
The cotton price that was increasing steeply until the end of February, has become firm during the last 20 days. As the gap in the international and domestic prices has narrowed down, now imported cotton appears to be attractive due to better yarn realisation, productivity and quality.
The Cotlook A index that prevailed around 79 cents during October has increased to 87 cents. Currently there is not much difference between domestic and imported cotton prices. Hence, the import contracts of cotton are gaining momentum. There is a significant increase in cotton crop size in Australia, expected to be around 45 lakh as against 28 lakh bales achieved last year and 18 per cent increase in crop size in the US. Since China has restricted its imports, global cotton position is very comfortable.
M Senthilkumar, chairman of SIMA, has stated that cotton position both in domestic and global markets are very comfortable. The cotton production in India for the season 2016-17 might be around 342 to 345 lakh bales as against 351 lakh bales estimated by the Cotton Advisory Board (CAB) at its meeting held in October last year.
Senthilkumar said that the cotton arrival as on March 20, 2017 was around 250 lakh bales as against 260 lakh bales that arrived during the same period last year. CAB had estimated the cotton imports as 17 lakh bales and felt that it might touch 30 lakh bales during the end of the season if the present trend of import continues. The mill consumption might be around 295 lakh bales as against 303 lakh bales estimated by CAB as the average count becomes finer.
The exports might be only around 40 lakh bales as against 50 lakh bales estimated by CAB as the Indian cotton price is not currently attractive in the international market. He said that the exports contracted so far might be only around 30 lakh bales. Currently India has contracted for around 15 lakh bales of cotton imports from West Africa and US. The prices might ease once the Australian cotton arrives in the market in May. The cotton supply position in India is very much comfortable and therefore, suggested the spinning mills to avoid panic buying.
While mentioning about Cotton Corporation of India's (CCI) commercial activities of cotton, SIMA Chairman thanked Union minister for textiles Smriti Irani and CCI for limiting CCI purchase to only around 1.05 lakh bales as against their original plan of 15 lakh bales and continue to maintain their supply only to the spinning mills.
Senthilkumar has advised the mills to avoid quoting higher price than the floor price for CCI cotton and thereby avoid further increase in the cotton prices. He has appealed to all the ginning units to avoid any adulteration and ensure supply of least trash and contamination free quality cotton as the industry and the Union Government have been planning to brand Indian cotton and its textile products.
He also stated that the higher cotton price prevailed during the peak cotton season has greatly helped the cotton farmers to realise attractive prices and much higher income than any other cash crop and strongly felt this would considerably increase the area under cotton in the forthcoming season if the monsoon favours. (KD)
Source Fibre2Fashion News Desk – India