Avoid panic purchase, cotton position comfortable: CAB

With the Cotton Advisory Board revising production for 2015-16 season from 380 lakh bales to 376, Southern India Mills' Association (SIMA) has urged mills to avoid panic purchase as the cotton position in the domestic and international market is very comfortable.
SIMA Chairman M Senthilkumar, in a statement issued here, charged traders for taking undue advantage and increasing the prices abnormally close to Rs 48,000 per candy as against Rs 33,200 per candy prevailing till April last.
He said domestic cotton prices today was expensive by over Rs 3,000 per candy and advised larger mills to opt for imports to soften domestic prices.

Stating that traders have been speculating on prices predicting acreage for the coming season would drop, CAB on the contrary, has estimated a reasonable acreage suggesting cotton supply position to be comfortable in the coming season also.
The abnormal price increase would have a serious impact on the entire textile value chain as international cotton prices are 10 per cent lower than the domestic prices. The Indian cotton textiles and clothing industry cannot compete in the global market and exports would drop further, he said.
Stating that a large number of mills had reduced capacity utilization as they would incur huge cash losses with current cotton prices, Senthilkumar said yarn price of 40s count has increased from Rs 6 to Rs 23 per kg in the last three months while clean cotton cost has increased over Rs 40 per kg.

He urged the Centrre to strongly consider its earlier proposal of Cotton Price Stabilization Scheme for spinning sector, consisting of five per cent interest subvention for purchase during October-April (peak season), increase credit limit from three months to nine months and reduce margin money from 25 per cent to 10 per cent, which would greatly benefit farmers and the industry and curb speculations.
CAB today revised its estimates from 380 lakh bales to 376 lakh bales, with closing stock to 43 lakh bales from 35 lakh bales in its previous estimates in February.
Similarly, the area under cotton was also revised as 119.10 lakh hectare against the previous estimate of 118.71 lakh hectare.