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Indian textile mills panic from steep hike in cotton price
18
Mar '13
Cotton price in India has suddenly and abruptly increased, creating a panicky situation in the spinning sector.
 
Recently, there have been retaliations by both cotton traders and the spinning industry with regard to the cotton price and supply situation in India. The Southern India Mills Association (SIMA) has strongly demanded release of cotton stocks from the Cotton Corporation of India’s (CCI) inventory. 
 
In a statement, Mr. S. Dinakaran, Chairman of SIMA has stated that the inventory held by government owned cotton procuring agencies such as CCI and some major traders is the reason for the sharp increase in the cotton price situation. 
 
Earlier, SIMA had urged the Government of India to intervene and help with the release of stock from the CCI inventory. This plea was strongly criticized by the Cotton Association of India.
 
Today, the SIMA chairman has stated that, due to lack of government action in the past 15 days, cotton price has increased by Rs 2,500 per candy (USD 46.35/candy) (1 candy = 355 Kgs). 
 
SIMA has criticized the trading practice by cotton merchants in the last 5 seasons which is resulting in price speculation and artificial scarcity.  Sankar-6 variety is now trading about 95 cents/pound which is higher than the international price. Yesterday, the New York Futures settled at 88.54 cents/pound for the December contract. 
 
The volatility in the cotton market is closely watched by cotton producers and traders in the United States and elsewhere. In a Plains Cotton Growers, Inc. (PCG) meeting in Lubbock, TX, Steve Verett, Executive Vice President of PCG stated “Price volatility isn't good for people growing or using cotton, and what we're experiencing right now is making both producers and users nervous. We saw the effects of two-dollar cotton on textile mills and we don't need to experience that again." 
 
A cotton merchant told this scribe in today’s PCG meeting, that this will be another year of price volatility, weather and market uncertainties.
 

Fibre2fashion News Desk - India


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