The Hindu Business Line : Cotton turns dull as yarn offtake declines

THE raw cotton market has remained bereft of any price buoyancy during the last two weeks, though bulk of the harvested cotton for the season has already hit the market. Some anxiety is also being displayed on the quality of fibre coming into the market at this point of time.

Slower off-take of cotton yarn by weavers and knitters and the stagnant woven cloth market caused by the merchants' hesitancy in placing fresh orders have added to the dullness in the cotton market, according to the market sources here.

Confusion over implementation of value-added tax (VAT) is also reportedly adding to the anxiety of the fabric/yarn trade. States such as Maharashtra, a major producer of fabric, have gone about implementing VAT. Others such as Madhya Pradesh and Gujarat, which have huge textile processing activity, have chosen not to implement VAT, leading to uncertainty in the textile trade, the sources said.

The higher volume of fabric imports intended this year by the garment manufacturers, the sources say, has also led to slow down in placing orders with the cloth weavers in major woven markets. Although April-June period is generally regarded a lean period for the cloth trade and export orders would gain momentum only around July, the less-than-the-usual order booked by the fabric converters is felt starkly.

Local cotton merchants say the record cotton production this year and the continuing good volume arrivals of kappas in the market may keep the price of all varieties of cotton at the present moderate scale for the next few weeks. The market also discounts scope for any sharp spiral in the price, as the rising temperature is expected to force the trade and the ginners to liquidate their cotton stocks fearing further weight erosion.

In the Tamil Nadu, summer cotton is poised to give a good yield due to better agro-climatic condition during this year's sowing. The trade anticipates Tamil Nadu crop during June/July to yield about 2.5 to three lakh bales, thus giving a head start for the mills in the region in bridging the gap in their raw material filling.

At the other end, cotton yarn market continues to under sell due to lack of indenting by the fabric manufacturers. Hosiery and hank yarn markets have not seen any major selling this week and consequently, there has been largely no change in the price of these yarns.

But there has been a marginal price increase made this month for the warp yarn where there is some movement, especially in the 80s and above count range.

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