Spinning mills press panic button

27 Feb '10

2 min read

There are inherent fears in the cotton spinning mills of the country that the cotton inventory of the country may not last till the onset of the next cotton season, despite the cotton crop registering gains when compared with those of the previous season.

The cotton crop in the current cotton season is expected to touch between 12.5 and 12.8 million bales against production of 11.34 million bales recorded in the previous season. In the last season, around the same time, stock of unsold cotton was 1.485 million bales while this season it was 0.612 million bales.

In the current cotton season ex-gin prices of cotton have risen exorbitantly from Rs 3,200 to 5,300 per maund (1 maund = 37.32 Kg). Traders who have held long forward positions have made a killing in the cotton markets.

Cotton production in China is also expected to dip by 10 percent in the current cotton season, which has led to a frenzy of cotton imports by the country, which is fuelling the price rise in international markets.

All this is giving rise to fears of closure or a cut in spinning capacity due to tight supply of raw cotton. Spinning mills in the country too are indulging in panic imports of cotton, particularly from India, since it can shipped in the shortest possible time.

The only redeeming fact is that the recent increase in temperature has encouraged the growers to start cotton sowing in a few areas in Sindh and growers in Punjab too may follow suit, which may mean a early arrival of cotton crop in the next season.

Fibre2fashion News Desk - India

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