Since January 2024, cotton prices have risen by over 15% in the global market and over 75% in the domestic market. This sudden surge in the last few months, especially 10-12% in the last 15 days, has created a panic situation across the value chain, as stated by The Southern India Mills’ Association (SIMA).
K Sundararaman, Chairman of SIMA, mentioned that cotton prices have increased by 10 to 12% within 15 days, creating a panic situation across the textile value chain. The body highlighted that the cotton price for Shankar-6 variety was hovering around ₹55,300 per candy and has now increased to ₹62,000 per candy.
Observing this trend, Sundararaman has strongly advised spinning mills to avoid panic buying, as the cotton supply position appears comfortable. He pointed out that the global cotton supply position and the stock-to-use ratios are also comfortable in most cotton-consuming countries.
The body added that the capacity utilisation of the mill sector has increased to 80-90% from the 70-75% level, and around 20 lakh bales have already been contracted for exports.
This rising price is also expected to impact the demand for the export of cotton, as the cotton price is rapidly approaching the international price, according to the body.
Furthermore, SIMA Chairman has appealed to the Union Minister of Textiles to advise the Cotton Corporation Of India (CCI) to support price stability for mills and sustain global competitiveness. It has been requesting the ministry to ask CCI to sell cotton, which the corporation has been doing as usual.
Speaking to CNBC-TV18, Lalit Kumar Gupta, Chairman and Managing Director of CCI, said, “If I compare prices from the first of January, it has gone up by 78% in the domestic market. The seed cotton prices that we purchase from farmers have also increased – currently trading at 8-10% higher than the MSP rate.”
Gupta mentioned that while CCI did procure some cotton last week, it expects farmers to stop selling cotton to CCI from this week onwards due to rising cotton prices.
He added, “Starting this week, we are not expecting any procurement for CCI since prices have increased. Farmers are selling in markets above the MSP. Until last week, we had farmers selling it to us.”
The Committee on Cotton Production and Consumption has estimated the crop size as 316.57 lakh bales, imports as 12 lakh bales, consumption as 310 lakh bales, exports as 25 lakh bales, and closing stock as 57.65 lakh bales for the cotton season 2023-24.
It is estimated that, so far this season, 222 lakh bales – which is 70% of cotton – have arrived in the market, as against last year's 165 lakh bales. Last year, production was 336 lakh bales, and arrival was 50%.
(Edited by : Anand Singha)
