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Cotton arrivals across the country are lower by at least 25 per cent between the current season’s start on October 1 and March 31 compared with the year-ago period. This has led to a section of the textiles industry demanding a detailed study on the availability of the natural fibre.
According to the Tamilnadu Spinning Mills Association (TSMA) Chief Advisor K Venkatachalam, cotton arrivals are lower by 88.95 lakh bales at 237.81 lakh bales during the season so far against 326.76 lakh bales in the year-ago period.
‘Alarming drop’
“... this figure is quite alarming and makes every stakeholder dealing with the cotton, much bothered over the non-arrival figures. The reason for the high figure might be due to the fact of cotton being stocked elsewhere or the crop estimates would be much lower,” he said in a letter to the Textile Commissioner, Mumbai.
According to Anand Poppat, a Rajkot-based trader in cotton, yarn and waste, the cumulative arrival of cotton this season till April 3 was 247 lakh bales. “Last week, only two lakh bales (of 170 kg) of raw cotton (kapas) arrived in markets across the country,” he said.
Lint cotton prices have soared to ₹89,500-90,500 a candy (356 kg) and raw cotton (kapas) to between ₹11,000 and ₹12,000 a quintal, forcing the textiles industry to express concern.
Domestic prices are ruling at a premium with benchmark contracts on the Intercontinental Exchange ruling at 138.83 US cents a pound (₹82,725 a candy). On the Multi Commodity Exchange, cotton for delivery in May is currently quoted at ₹43,420 a bale or ₹90,926 a candy.
Industry meets Goyal
On Monday, a delegation of the Textiles Industry, comprising T Rajkumar, Chairman, Confederation of Indian Textiles Industry; Manoj Patodia, Chairman, The Cotton Textiles Export Promotion Council; Narendra Goenka, Chairman, Apparel Export Promotion Council; Ravi Sam, Chairman, The Southern India Mills’ Association, and Raja M Shanmugham, President, Tiruppur Exporters Association, met Union Commerce, Industry and Textiles Minister Piyush Goyal and urged the removal of 11 per cent import duty on cotton. They also raised the issue of the non-availability of quality cotton.
TSMA, which has over 700 members and has represented the matter with the Textile Commissioner earlier, said this season it had found arrivals of cotton comparatively low against last year.
“Even if crop estimates are lower, there cannot be such an alarming figure in the non-arrival of bales of cotton this season. Therefore, we wish to state that there requires a detailed study, to ascertain the reasons, as to why such a high quantity of cotton, is not arriving the markets till now and where the quantity of cotton is presently available, without being shared to the market,” Venkatachalam said.
Inventories down
Inventories at the mills were getting reduced on a daily basis and many mills have resorted to “hand-to-mouth” existence.
“.. many mills are facing closure. Some other mills have slowed down their processes, either by declaring one-day closure in a week and not running the mills during power cuts. The speed of the machines has been reduced to 20-25 per cent in order to control the production to cope up with the cotton availability,” he said.
Many mills might have to down shutters for want of cotton, Venkatachalam said and demanded that futures trading on the Multi Commodity Exchange (MCX) be stopped. He also sought duty-free import of cotton.
On the other hand, TEA, in a press release sharing information the industry meeting with Goyal, said the “unprecedented” cotton price has forced spinning mils to raise the price of yarn by ₹30 a kg from April 1.
It urged the Centre to scrap the import duty on cotton and allow duty-free import of 40 lakh bales to help prices stabilise. It also said stakeholders in the sector should be asked to mandatorily declare stocks with them, besides curbing trading on MCX.
Prices at 11-year high
This season, prices of the fibre have surged to near 11-year highs on lower production in the US due to dry weather and strong demand, particularly from China, in view of the Covid-19 pandemic curbs being relaxed.
Poppat said multinational companies based in India had good stocks and are currently selling aggressively. Some ginners, who are bullish, are also holding stocks. “The Centre must reduce import duty. Or else, ending stocks will be near zero and cause problems,” he said.
According to the Committee on Cotton Production and Consumption, ending stocks of cotton this season are projected at a three-year low of 45.46 lakh bales (71.84 lakh bales last season). Production has been estimated lower at 340.62 lakh bales (352.48 lakh bales).
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