Home / Knowledge / News / Textiles / Cotton prices to remain range-bound in CY16
Cotton prices to remain range-bound in CY16
24
Jun '15
Cotton prices will remain range-bound during cotton year 2016 even if domestic production declines by 10 to 15 per cent, according to ICRA, an independent and professional investment information and credit rating agency.

In a report titled Outlook on Cotton Prices and Consequent Impact on Indian Spinning Industry, ICRA said increased government interventions have driven prices over last few years.

It pointed out that despite increasing supply and negligible demand growth over the past four years (CY 2011-12 to CY 2014-15), the global cotton prices and trade were increasingly driven by the government policies in various producing and consuming countries. The massive cotton procurement undertaken by China during the cotton years from CY 2011-12 to CY 2013-14 at higher support prices than the international prices resulted in increased dependence of the Chinese mills on cheap imported cotton, thereby resulting in increased imports by China and hence rising prices.

This boosted import demand from China supported the international prices at $2/Kg despite the built up in the global cotton stock levels; as 50 per cent of the cotton production in China was annually accumulated by the Chinese government under its support program and hence was not available in market. Subsequently, with change in the China’s cotton policy from CY 2014-15, which was announced in April 2014, the international prices witnessed a sharp decline with Cotlook A index, the most prevalent measure of prices, lower by 24 per cent (at $1.58/Kg) in April 2015 on a YoY basis. The change in the China’s cotton policy to direct subsidy mechanism to farmers from the earlier policy of supporting the prices through reserve purchase program made domestic cotton available to mills in China at market rates and reduced the import dependence.

The ICRA report said the demand-supply dynamics was distorted by Indian Government in CY 2014-15. With reduced import demand from China and consequent decline in international prices, the cotton prices in India (which is largest cotton producer in world) declined below the support prices offered by Indian government leading to massive procurement (25 per cent of CY 2014-15 production) by government owned entities , thereby curtailing the supplies from domestic as well as international markets and hence supporting the international prices (in $ terms) closer to support prices offered by Indian government. Had Indian government not undertaken support operations, the domestic and international prices could have declined further.

According to the report, cotton cultivation remains attractive for the Indian farmers, which will prevent any large shift towards alternate crops and hence mitigate concerns of lower production.

The area under cotton cultivation in CY 2015-16 is not expected to decline significantly as even after a decline in the domestic cotton prices by 21 per cent over the last one year, the high support prices for cotton still continue to keep cotton cultivation attractive for the farmers as the profit per quintal for cotton remains high amongst the competing crops.


Must ReadView All

Apparel/Garments | On 28th Jul 2017

Aditya Birla Fashion Q1 revenue up 25% y-o-y

Driven by strong performance across all business segments, revenue...

Fashion | On 28th Jul 2017

Kering’s first half consolidated revenue up 28.2%

Kering has announced a consolidated revenue of €7,296.2 million for...

Courtesy: Business wire

Textiles | On 28th Jul 2017

Taiwan launches new products at Outdoor Retailer show

The Taiwan External Trade Development Council (TAITRA) hosted the...

Interviews View All

Priyanka
Studio Priyanka Rajiv

‘To reinvent the age-old tradition of embroidery to suit demographics and...

Anvita Mehra
Confidential Couture

‘It is going to take some time for Indian buyers to get accustomed to...

Abhishek Samdaria
Reflete

GST will certainly reduce a lot of paperwork in future

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Rupa Sood and Sharan Apparao
Nayaab

Nayaab, an exhibition meant to celebrate Indian weaves, is in its second...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

July 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
61.1%
No
22.2%
Skip
16.7%

Total Votes: 18

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
33.3%
No
44.4%
Skip
22.2%

Total Votes: 18

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
83.3%
No
5.6%
Skip
11.1%

Total Votes: 18

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
50.0%
No
11.1%
Skip
38.9%

Total Votes: 18


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X