The Hindu Business Line : Cotton prices stable despite demand slump

Despite the sharp mark up in minimum support price, raw cotton arrivals across the country have dipped 22 per cent to 36.50 lakh bales (lb) as on November 15, against 46.65 lakh bales registered in the same period last year, according to data from Cotton Corporation of India.

Arrivals in Gujarat almost halved to 8.75 lakh bales (16.25 bales), Maharashtra 4.50 lb (6.10 lb) and Madhya Pradesh 3.80 lb (4.50 lb). In the northern region including Punjab, Haryana and Rajasthan, the arrivals fell 14 per cent to 12 lb (13.90 lb).

In the southern region - Andhra Pradesh, Karnataka and Tamil Nadu - arrivals were up 30 per cent to 6.70 lb.

Prices stable

Lint prices (S6 - 29 mm) in Gujarat dropped marginally to Rs 21,650 a candy (of 355.65 kg) from Rs 22,200 a candy in the fortnight ended November 15, but it was much higher from the last year level of Rs 19,800 a candy.

"Except for Gujarat, prices in other regions remained almost stable due to the higher MSP.

Demand was weak as millers and ginners stayed away on the back of rise in cost of production," said Mr Vijay Trivedi, Vice-President, Commodity and Trade News.

In Punjab, the J-34 variety was quoted higher at Rs 2,190 a maund, the Mech (29 mm) was at Rs 21,550 a candy in Madhya Pradesh, the Jayadher in Karnataka was at Rs 21,000 a candy, DCH-32 (34 mm) Rs 32,500 a candy, Brahma (29 mm) Rs 23,000 a candy.

In Andhra Pradesh, MCU-5 (30 mm) variety was traded between Rs 22,000 and Rs 23,600 a candy, 29mm variety in Maharashtra was at Rs 20,000-Rs 21,800 a candy.

The J-34 variety in Haryana was quoted at Rs 2,110 a maund and the Desi-RG in Rajasthan was at Rs 2,850 a bale and Desi-SG was Rs 2,900 a bale.

Ginners in trouble

The All Gujarat Ginners Association's General Secretary, Mr Saurin Parikh, has convened a meeting of ginners from Madhya Pradesh, Gujarat, Karnataka, Andhra Pradesh, Punjab, Maharashtra, Haryana and Rajasthan to decide the future course of action in the testing times.

Apart from increase in cotton prices, ginners are now facing a demand of 20-30 per cent hike in workers salaries, besides the rise in power cost, said Mr Yogendra Gupta, Chairman of Haryana-based Supreme Ginning Factory.

"If the situation continues about 50-60 per cent of the ginning capacity in the country has to be closed down. Export demand has fallen drastically due to financial crisis," said a ginner.

Global demand down

Global cotton exports are expected to fall 6.47 per cent to 7.8 million tonnes (mt) in 2008-09 due to slowing demand from textile importing countries, according to the International Cotton Advisory Committee (ICAC).

Mill use will fall by four per cent to 10.5 mt in mainland China, the world's largest consumer, while China cotton imports would decline by 10 per cent to 2.3 mt.

Consumption in China would see a fall due to "rising costs of production, the strength of yuan against the US dollar and slowing demand from textile countries", said ICAC

The total global cotton consumption would stand at 25.5 mt, down by 3 per cent from previous year. World cotton output is projected to decline by 6 per cent to 24.7 mt.

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