Times of India, India
CHENNAI: Despite having a bumper estimated cotton crop of 315 lakh bales (170 kgs each) for the 2014-08 season, the domestic textile industry is saddled with high prices and low carry forward stock. Ironically, the current domestic prices of some popular cotton varieties are higher than international prices, according to industry players.
stock. Ironically, the current domestic prices of some popular cotton varieties are higher than international prices, according to industry players.
The season average Cotlook A Index, which tracks cotton prices, shows that on the average price for the past 11 months has been pegged at 73 cents per pound by International Cotton Advisory Committee, the premier global cotton body. Current domestic prices of popular varieties such as Shankar-6 works out to 82 cents per pound (ex-ginnery) and would cost a mill about 90 cents if transport costs are included.
Prices of comparable cotton varieties from the US, Uzbekistan and West Africa are now quoting between 78-81 cents. Popular cotton varieties in the country are costlier by 10-20% compared to May levels.
“Indian cotton has become expensive. So, not much physical movement is happening,” says A Ramani, joint secretary of the South India Cotton Association. Though exports are not happening in a big way now, large firms have covered available cotton in the country anticipating strong demand because of low carry forward stocks, industry players say. The carry forward stock for the ensuing cotton season is estimated at 43 lakh bales or about 18% of stock-in-use ratio. This is one of the lowest carryover stocks. Typically carry forward stocks should meet three months requirements, but in the current situation, it willlast only for two months.
The country consumes about 20 lakh bales of cotton a month and the estimated carryover stock can’t even cover two months’ requirement.
