The Southern India Mills’ Association (SIMA) said the Cotton Advisory Board (CAB’s) has over estimated the production and under estimated the consumption. According to industry experts any further export of cotton would serioded the quantity decided by Group of Ministers by two lakh bales.
J Thulasidharan, chairman, SIMA said that CAB, at its first meeting held on January 6, 2011 has estimated the cotton production as 32.9 million bales and consumption as 27.5 million bales (including 2 million bales of non-mill consumption), retained the exportable surplus as 5.5 million bales and thus reducing the closing stock to 4.45 million bales as against the Group of Ministers (GoM) promised quantity of 5 million bales.
He said, “CAB has over estimated the production and under estimated the consumption, textile mills would be forced to curtail their production for want of raw cotton from July onwards resulting abnormal increase in cotton and yarn price.” CAB has reported, cotton production in the northern region (Punjab, Haryana and Rajasthan) will be less than 4 million bales, which has been endorsed by the ginning and trading community. In the past several years, Maharashtra farmers have been selling sizable kapas in Gujarat to fetch higher income whereas in the current season, since the farmers are realising good prices in Maharashtra itself, trading of kapas to Gujarat has come down drastically. This will result in Gujarat crop to less than 10 million bales, he said, Thulasidharan said, in Maharashtra, both production and quality, has been affected from the fact of large scale arrivals of low micronnaire cotton. “This in turn is an indication of severe crop damage in this state, therefore Maharashtra crop would be only around 8 million bales as against the CAB estimate of 9.2 million bales”.
On extra long staple (ELS) cotton production, he said, erratic weather condition and unseasonal rains have seriously affected the crop in Karnataka and Madhya Pradesh.
Total DCH production may not cross even 125,000 bales, out of which sizeable quantity of arrivals is in the hands of exporters due to recent export clearance and grant of additional quota. With abnormally high ELS cotton prices (280 to 285 cents for PIMA and GIZA 88), Indian spinning sector will have serious setback in fine and superfine counts, said Thulasidharan.
He further said the hoarding of ELS cotton by the exporters has increased the DCH 32 cotton price from Rs 53,000 per candy to Rs 70,000 in a span of 10 days (spot prices), an increase of 24 per cent.
Thulasidharan estimated cotton production for the season 2010-11 will be only around 30.9 million bales. As far as cotton consumption is concerned, he stated, that Textile Commissioner Office has already estimated at 27.5 million bales for the current cotton season. “Non-submission of data to the Textile Commissioner’s office is a handicap in arriving at the consumption figure. If the consumption of non-reporting mills and also the capacity being added in the spinning sector, the requirement including non-mill consumption would exceed 28.5 million bales.”
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“Viewing the production and consumption data, any further export of cotton would seriously affect the entire textile value chain. Even with the current cotton position, mills will face shortage of cotton from July onwards thus resulting in abnormal increase in yarn prices, ultimately affecting the common man”.
The Association seeked ministry of textiles to take up the matter suitably with the commerce and agriculture ministries and restrict the cotton export at 5.5 million bales and pointed out that the permitted quantity of export of cotton has already exceeded the quantity decided by Group of Ministers by 200,000 bales.