The Cotton Advisory Board (CAB) has estimated a comfortable cotton supply position for the cotton season of 2015-16. The body has estimated the closing stock at 43 lakh bales as against its previous estimate of 35 lakh bales for the season.
The area under cotton has also been revised to 119.10 lakh hectare as against its previous estimate of 118.81 lakh hectare for the 2016-17 season.
M Senthilkumar, chairman, The Southern India Mills’ Association (SIMA), has stated that the cotton position in the domestic and international market is very comfortable.
He has advised mills to avoid panic purchase as the traders are taking undue advantage and have increased the prices abnormally closer to R48,000 per candy as against R33,200 per candy that prevailed till April 2016.
Senthilkumar said the domestic cotton price today is expensive by over R3,000 per candy and therefore, suggested that larger mills should opt for import so that the domestic prices soften.
The SIMA chairman pointed out that the traders have been speculating on the prices, saying that the acreage for the forthcoming season would drop. On the contrary, CAB has estimated a reasonable area and therefore, the cotton supply position would be comfortable in the forthcoming season also, he added.
The SIMA chief further said abnormal increase in cotton price would have a serious impact on the entire textile value chain as the international cotton price is ruling over 10% lower and the Indian cotton textiles and clothing industry cannot compete in the international market and the exports would drop further.
“A large number of mills have reduced their capacity utilisation as they would incur huge cash losses with the current cotton prices. The yarn price (40s count) has increased from R6 to R23 per kg during the last three months while the clean cotton cost has increased over R40 per kg,” he said.
He has appealed to the Centre to strongly consider its earlier proposal of “Cotton Price Stabilisation Scheme for spinning sector” consisting of 5% interest subvention for cotton purchase during October to April (peak season), increase the credit limit from three months to nine months and reduce the margin money from 25% to 10%. He said this would greatly benefit the farmers and the industry and curb speculations.