Cotton prices hit 3-year low, ginning mills suffer
By DHEERAJ GUPTA 2024-12-30 11:34:17
Ginning mills suffer as cotton prices fall to a three-year low.
Ahmedabad: Due to a fall in international prices, cotton prices have fallen to a three-year low of Rs 53,500 per candy (356 kg). Despite peak season, ginning mills in Gujarat are facing financial difficulties due to falling prices, with over 25% of the units shut. The state witnessed an arrival of 30,000 cotton bales (170 kg each) per day, with the Cotton Corporation of India (CCI) making substantial purchases. Meanwhile, spinning units are operating at almost full capacity and showing positive financial results.
"Cotton prices have fallen to a three-year low of Rs 54,000 per candy. Ginning units are struggling as they bought raw cotton at high rates. Now the rates are falling continuously, putting pressure on mills. The fixed cost of ginning units is high; therefore, these units operate even after incurring losses," said Apurv Shah, vice-president, Gujarat Chamber of Commerce and Industry (GCCI). Industry reports indicate a decline in cotton cultivation in Gujarat, with production estimated at 88 lakh bales this year, 4 lakh bales less than last year. "November to January is considered the peak season for cotton, and despite this, ginning units are not operating at full capacity. There are around 800 ginning units in Gujarat; 450 of them are fully operational, while many are operational only a few days a week. Around 20% of the mills have not started crushing this year," Shah said. Spinning facilities have become profitable due to the fall in cotton prices.
Jayesh Patel, senior vice-president of Spinners Association Gujarat (SAG), said, “At the moment, spinning units are getting some profit, as cotton prices have gone below the level of Rs 54,000 per candy. Now, CCI is buying a significant amount, and we demand that it should keep a reserve quota of cotton for the Indian textile industry, so that the industry gets priority. Spinning mills in the state are running at almost full capacity, and yarn prices are currently at Rs 240 per kg, but the demand is not strong. So there is a fear that prices will come down in a few days, as cotton stocks in the open market are reducing with CCI's strong buying.
