SIMA Advises Mills Against Panic Buying Of Cotton

Industry news

SIMA Advises Mills Against Panic Buying Of Cotton

The Southern India Mills Association (SIMA) has advised mills against panic buying of cotton. "Drop in crop production by 8-9 lakh bales compared to the Cotton Advisory Board's estimate of 351 lakh bales for the 2016-17 season, or lower arrivals as on March 20 compared to the corresponding period of the earlier season, does not necessarily mean there is a supply shortfall.

Both at the global level and in India, the cotton supply position is very comfortable," said SIMA Chairman M Senthilkumar. Asserting that there is no big difference between domestic and imported prices of the fibre, he conceded that imported cotton gained preference due to better yarn realisation, productivity and quality. From Rs 38,000-39,000 a candy (of 355 kg) at the beginning of the cotton season (for the benchmarked Sankar-6 variety), the rates have now swelled to Rs 43,500-44,000.

Prices moved north till end-February, and now appear firm. But imported fibre definitely seems better while the price difference is not much, said cotton spinners. And import contracts are to be gaining momentum. Reports indicate that there has been a significant increase in the Australian cotton crop - from 28 lakh bales last year to 45 lakh bales this year and an 18% increase in the US cotton crop. "With China's restrictions on imports, the global cotton position is more than comfortable," observed SIMA's Senthilkumar.

According to him, India has contracted for 15 lakh bales of cotton import from West Africa and the US. "Prices might ease when Australian cotton arrives in the market around May," he said & advised the spinning mills to refrain from speculation.