India: Cotton prices likely to remain stable

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The Indian Cotton Federation (ICF) does not foresee big fluctuations in cotton prices this season.

Comfortable stock position, poor export demand, limited buying by domestic mills have helped keep prices under control, say federation officials.

ICF Vice-President K N Viswanathan said that cotton arrivals have been normal at 345 lakh bales.

Lean demand

“While the stocks at this time of the year usually lie with the traders and mills, this year, due to lean buying by the mill sector, huge volumes have been purchased by the Cotton Corporation of India. The quality is good and [is] not as feared by a section of the trade,” he said.

The Corporation has also been releasing the cotton at regular intervals to meet mill demand, he said and added that global demand has been slow and restricted to far eastern countries such as Bangladesh and Vietnam.

China has been a non-importer for some time and the demand from the domestic mills limited to their sale of yarn and fabrics.

In such a situation, volatility in prices won’t happen, Viswanathan said.

The farmers, he said, are happy with the minimum support prices this year and will, therefore, keep the area under cotton at the same level the next season.

Mills’ woes

But what the textile sector seeks at this juncture is support to hold sufficient volumes at an affordable interest rate of 7 per cent, Viswanthan said.

He pointed out that mills usually carry 3 to 8 months stock as per spinning pattern, and location from the source to maintain uninterrupted production.

Due to sluggish demand for yarn and garments, the mills would need to augment their financial limits to hold cotton as also restrict the interest burden, he said, adding “and so should this burden be limited for cotton growers, traders and government agencies to boost industry and trade.”

– The Hindu

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