Seeing a comfortable cotton supply position for the cotton season of 2015-16, the Cotton Advisory Board (CAB) has estimated the closing stock at 43 lakh bales as against its previous estimate of 35 lakh bales for this season. Similarly, the area under cotton has also been revised to 119.10 lakh hectare as against its previous estimate of 118.81 lakh hectare for the 2016-17 season.

M Senthilkumar, Chairman, The Southern India Mills’ Association (SIMA), points out cotton position in the domestic and international market is very comfortable. Accordingly, he has advised mills to avoid going in for panic purchase as the traders are taking undue advantage and have increased the prices abnormally closer to R48,000 per candy as against R33,200 per candy that existed in April this year.

The SIMA chairman said that the current domestic cotton price was expensive by over R3,000 per candy and therefore he suggested that larger mills should opt for import so that the domestic prices soften.

The SIMA chairman pointed out that the traders have been speculating on the prices, saying that 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 added. Abnormal increase in cotton price would have a serious impact on the entire textile value chain as the international cotton price is around 10 per cent lower and the Indian cotton textiles and clothing industry cannot compete in the international market and the exports would drop further.

He also appealed to the Centre to strongly consider its 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), increase the credit limit from three months to nine months and reduce the margin money from 25 to 10 per cent adding that this would greatly benefit the farmers and the industry and curb speculations.