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ICMF convenes Cotton Users’ Meet

E-Tex Staff - Mumbai

Prices of cotton in global and domestic markets are rising in tandem. This has made the domestic textile industry tizzy as there is no matching increase in prices in the value-added chain like yarns, fabrics and garments. Indian Cotton Mills’ Federation (ICMF), realising the situation, convened a meeting of its members on November 6 to discuss the strategy to combat the impending crisis.

Barring Bengal-desi (new crop) and DCH-32 (new crop) grown in Karnataka cotton prices are on rise, despite a bumper crop this year. Even in the international market, Cotlook A Index has touched further highs in October 30, 2003 as against the averages of 58.50 in June, 60.21 in July, 60.50 in August and 64.18 in September. According to the initial official estimate, cotton production in 2003-04 is likely to increase by 40.9 per cent to be at 13.12 million bales of 170 kg each as against 9.31 million bales in the previous year. Mr D K Nair, secretary-general, ICMF, says, “The phenomenal rise in domestic cotton prices are linked to global trends. Cotton output has been good in the country this year and this should not cause a rise in prices but prices may be high due to a possible increase in exports of cotton.” There are reports that cotton exports may touch three lakh bales this year as against 50,000 bales exported last year. Exporters are taking advantage of the rising prices for making a good earning. Mr Nair said that the current situation was good for cotton exporters as they can procure cotton in the country at a comparably low rates and export at higher prices. He said that possibly the booking of large export orders might be a cause for a rise in domestic prices and added that there might also be a possibility of hoarding by traders for creating artificial shortage and consequent rise in prices. As regards the global price rise, Mr Nair said that this was due to the rise in global consumption and a lower estimate of ending stocks.

According to the Washington-based International Cotton Advisory Committee (ICAC), the global production of cotton in 2003-04 has increased to 20,486 tonne as against 19,142 tonne in the previous year. But the global consumption of cotton estimated by ICAC is likely to increase to 21,233 tonne as against 20,963 tonne in the previous year and this would result in a lower carryover stock at the end of 2003-04 ie at 8,040 tonne as against 8,786 tonne in the previous year, he said. Mr Nair attributed the entry of China in the global market as an importer as another cause for the rising prices.