CAB estimates 2015-16 closing stock at 43 lakh bales

13 Jul '16

3 min read

The Cotton Advisory Board (CAB) has estimated a comfortable cotton supply position with closing stock of 43 lakh bales for the cotton season 2015-16, ending on September 30.

CAB has increased the closing stock estimate from its February 2016 estimate of 35 lakh bales.

In 2015-16 season, India produced 338 lakh bales of cotton, while it imported another 15 lakh bales, according to the CAB. Including the opening stock of 66 lakh bales, the total supply during the season is projected at 419 lakh bales.

On demand side, mills consumption is pegged at 298 lakh bales, while non-mill use at 68 lakh bales. Including export of 68 lakh bales, the total demand is estimated at 376 lakh bales thus leaving a closing stock of 43 lakh bales.

Post release of CAB estimates, The Southern India Mills' Association (SIMA) chairman M Senthilkumar advised mills to avoid panic purchase as the traders are taking undue advantage and have increased the prices abnormally closer to Rs 48,000 per candy, as against Rs 33,200 per candy prevailing till April 2016.

Stating that the domestic cotton price today is expensive by over Rs 3,000 per candy, he suggested larger mills to opt for import so that the domestic prices would soften.

SIMA chairman pointed out that the traders have been speculating the prices stating the acreage for the forthcoming season would drop. On the contrary, CAB has estimated a reasonable area and therefore, the cotton supply position would be comfortable in the forthcoming season also.

He said the abnormal increase in cotton price would have a serious impact on the entire textile value chain as the international cotton price is ruling over 10 per cent lower and the Indian cotton textiles and clothing industry cannot compete in the international market and the exports would drop further.

“A large number of mills have reduced their capacity utilisation as they would incur huge cash losses with the current cotton prices,” Senthilkumar said. He added that the yarn price (40s count) has increased from Rs 6 to 23 per kg during last three months while the clean cotton cost has increased over Rs 40 per kg.

For the benefit of the farmers and the textile industry and to curb speculations, he appealed to the Central government to strongly consider SIMA's earlier proposal of 'Cotton Price Stabilisation Scheme for spinning sector' consisting of 5 per cent interest subvention for cotton purchase during October to April (peak season), increasing the credit limit from three months to nine months and reducing the margin money from 25 per cent to 10 per cent. (RKS)

Fibre2Fashion News Desk – India

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