Higher cotton stocks will put India in comfortable position

Cotton inventory, estimated at around 70 lakh bales at the close of 2014-15 season is expected to be the highest ever cotton stock carried by India after 2008-09.

This huge volume of carry forward cotton stock would place the country in a comfortable position, the Chairman of The southern India Mills’ Association T Rajkumar said.

Selling policy drag He said the predominantly cotton-based textile industry in the country was subjected to crisis due to volatility in the price of the white fibre.

“There was some respite during the current season as the prices had remained comparatively stable due to reduced imports by China and the over supply in the global market,” Rajkumar added.

As international prices were ruling lower than Indian prices, CCI (Cotton Corporation of India) had to venture into MSP operations; CCI procured around 87 lakh bales during 2014-15 season. But their selling policy affected the domestic market as also the mills that used certain varieties of cotton (grown in Telangana and Andhra Pradesh) as the cotton was not released on time.

The global area under cotton is expected to drop by 7 per cent to 31.3 million hectares in 2015-16 and the production by 9 per cent to 23.9 million tonnes.

Yet, the supply position in 2015-16, industry sources say, “is expected to be comfortable as China would continue to reduce imports and downsize its reserves.”

Offloading woes “The cotton spinning mills, which hitherto carried 3-6 months’ cotton stock to tide over price volatility, can now reduce the inventory to 1-2 months and the mill sector can leverage the current situation by strengthening on the export front, particularly in the garments and made-up segments,” the SIMA Chief said.

He further pointed out that the CCI could sell only 12 lakh bales against 25 lakh bales offered during the last couple of months as the Corporation’s rates were high.

“By not offloading the fibre procured from Telangana and Andhra Pradesh till end-April, the Corporation gave mills a tough time, resulting in flaring up of prices.”

CAB rejig The industry has been pleading with the Centre to restructure the Cotton Advisory Board (CAB) by inducting industry stakeholders for better adoption of strategies and policies, Rajkumar said.

Reverting to CAB’s export estimate of 70 lakh bales during the current season, the SIMA Chief said “only around 45 lakh bales have been exported so far. It may not exceed 55 lakh bales this season as China has stopped imports.”

Voicing concern over purported rumours of Government attempting a G2G (Government to Government) arrangement to export definite cotton volumes to countries such as Thailand, China, Bangladesh, Pakistan and Vietnam, the SIMA Chief appealed to the Centre to desist from such a policy and leave the cotton market without any government interference.

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