Raw silk prices declined by 13% during the fiscal ended March 2008 due to lower export demand for finished silk goods. Slowdown in the US and German economies coupled with rupee appreciation against the dollar and Chinese competition have eaten into India’s silk exports, which have fallen by over 25% during the fiscal 2007-08, impacting local raw silk prices, trade sources claimed. Although the rupee started weakening in the past one month, it had risen over 12% against the dollar last year affecting silk export revenue. However, buyers have utilised the opportunity and stocked raw materials at a lower cost for the next production season that resulted in the overall transaction in silk exchanges moving up significantly.
According to the latest figures released by the Central Silk Board, the total quantum of mulberry raw silk transaction at all silk exchanges of Karnataka increased by 13% to 1,363 tonne in 2007-08. The silk exchanges in Karnataka account for around 70% of raw silk transaction in the country. The decline in raw material prices led to a crash in cocoon prices, making farmers in all three silk producing southern states – Karnataka, Tamil Nadu and Andhra Pradesh suffer. According to the silk market in Ramanagaram, Asia’s largest silk exchange, the average price for CSR hybrid declined to Rs 144 per kg from Rs 154, while cross breed prices tumbled to Rs 115 from Rs 125.
With the rupee depreciating again since the past one month, the market is hopeful of increasing exports in the coming months and that is expected to push up the prices of raw silk materials in the near future.