Steep hike in cotton prices vex textile industry

The textile industry may import more than the estimates as domestic production might be less than the expected 352 lakh bales and also international cotton prices are lower than the Indian prices. In the last few weeks, there has been steep hike in cotton prices, by about Rs.6,000 a candy which is a matter of concern to the textile industry for which cotton is the main raw material.

According to data obtained from sources in the trade, cotton price (Shankar – 6 variety) is now Rs. 39,600 a candy compared to Rs 34,300 in April and Rs. 34,000 in January this year. Prior to that it has been fairly stable in the Rs 32,000 to Rs. 34, 000 range between January and In January last year, the price was Rs. 32,000 a candy.

This has hit the acquisition prices for textile mills that do not have stock of the raw material. The mill gate price is more than Rs. 40,000 a candy. This is an abnormal increase, said C. Varatharajan, president of the South India Spinners’ Association.

However, sources in the Ministry of Textiles are not worried as there is sufficient availability of cotton. Both imports and exports are at the expected levels. Prices also depend on market sentiments, said a senior official in the Ministry of Textiles. At its meeting in February, the Cotton Advisory Board estimated imports to be 11 lakh bales and exports to be 70 lakh bales this year.

According to sources, prices will come down once the rains start in the cotton cultivating areas. Prices have gone up mainly because of the delay in the arrival of the monsoon and reports that cotton production next season might be lower than in this year.

M. Senthil Kumar, chairman of Southern India Mills’ Association said that they have asked the textile mills not to panic. But, the Government should create a stability fund to help mills buy cotton during the peak season.

According to Prabhu Damodaran, secretary of Indian Texpreneurs Federation, the Government should clearly indicate the cotton position so that there is no speculation in prices.

The mills felt the price pressure in cotton last year only during July-August. This year, it has started early.