2015-3-27
With cotton prices
starting to pick up, spinning mills are averse to buying this year. On
Tuesday, the price of cotton rose Rs 1,200-1,400 a candy (356 kg) to Rs
33,830 a candy. J 34 is a variety of cotton grown in northern India with
a strength of 4.5 micronaire (a measurement of the thickness of the
cell walls of a cotton fibre) and length of 29 mm. A surge of Rs 300 per
candy in the price of Shankar-6 (long staple cotton of 32 mm and 3.8
micronaire) has also been witnessed in Gujarat and its price is in the
range of Rs 32,500 a candy.
These
prices are still lower than last year`s price of Rs 44,000 a candy.
However, millers are worried a price revision in cotton now will disturb
the price parity between yarn and cotton. The low demand for cotton
yarn in international markets is already keeping the capacity
utilisation low at 80 per cent.
The Cotton
Corporation of India (CCI), the nodal agency of the Government of India
that purchases cotton if prices fall below the minimum support price,
has so far purchased 8.6 million bales (one bale is 170 kg) of cotton,
said B K Mishra, chairman, CCI.
[We
might purchase another 500,000-700,000 bales in the 2014-15 rabi
marketing season. Of this, 260,000 bales have been liquidated by the CCI
at a price of Rs 32,500 a candy," he said. He added that Confederation
of Indian Industries (CII) was not planning to liquidate, but would do
so if there was a need for it. [The spinning mills can thrive on the
market availability till harvesting is on in different parts of India
and we project to enter when the harvesting comes to an end."
Most
of the mills said they had stock for three-to-four weeks, but
purchasing cotton at a premium amid low profitability was pinching them.
They want CCI to intervene so that cotton prices do not rise any
further.
According
to T Kannan, chairman, CII National Committee on Textiles, if
international demand is bullish, 25-30 per cent of yarn manufactured in
India could be exported. At present, demand from China is cold.
As CCI has procured one-fourth of the total crop this year, its intervention will boost the health of the mills.
According to Mishra, CCI has 45,000 bales of cotton from last year`s stock and that is meant for government-owned mills.
The
millers are also concerned about the fact that cotton loses its
moisture content in summer, which means four to five per cent weight
loss. This loss is recovered in monsoon, thanks to high atmospheric
humidity. So CCI might not offload the stock before the onset of
monsoon.
While
large mills have a fire-fighting system in place, small mills might
have to face lean production days in the wake of flip-flops in CCI`s
decision.
Source:Business Standard
|