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Flare up in cotton prices keeps textile sector on boil

01
Dec '09
The textile industry had sighed with relief on market trends witnessed in the last three months. Textile and garment exporters who had borne the brunt of the economic turmoil, too had reasons to be happy, as order book positions were witnessing a marked improvement, when compared with the previous few months.

But the party may not last long. Cotton prices have risen dramatically in the last three fortnights and the Gujarat grown Shankar-6 variety of cotton has seen its prices zoom by nearly 20 percent, when compared with prices prevailing in March-2009, which could put brakes in the recovery process.

The cotton crop is expected to be a marginally lower than in the previous years and due to a surge in exports of raw cotton, the white gold is becoming dearer with each passing day. According to estimates of an International Cotton Advisory Committee, world cotton production is also expected to dip by around 5 percent.

All these factors put together have led to a flare up in raw cotton prices and at a time when textile mills are running at full capacity, all due to a surge in demand from apparel manufacturers supplying in the domestic as well as overseas markets.

The rise in cotton prices will have a direct impact on the rates quoted by apparel exporters to their overseas buyers, as if prices continue to rise, yarn and fabric manufacturers will have no option but to increase their prices correspondingly, which does not augur well for a sector, which is on the path to recovery.

Fibre2fashion News Desk - India


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