Indian Spinning Mills Turn Cautious as Cotton Season Nears End
Spinning mills in India are exercising caution in purchasing cotton as the current season approaches its end, aiming to avoid liquidity issues.
“Being the end of the cotton season and liquidity issues in the overall market, mills want to be careful in cotton purchases. Man-made and cellulosic fibre penetration has also helped mills to reduce their exposure to cotton,” said Prabhu Dhamodharan, Convenor, India Texpreneurs Federation (ITF).
Despite the Cotton Corporation of India's (CCI) substantial stock of over 20 lakh bales, prices quoted by CCI remain a dampener due to slack demand, according to Ramanuj Das Boob, vice president of the All India Cotton Brokers Association.
“If traders buy cotton from CCI and resell it to mills on credit, the economy doesn’t work out. So, they are also silent,” he said.
The lack of demand for yarn and declining prices are hurdles for the textile industry, according to Rajkot-based cotton trader Anand Popat. Bearish speculators on the InterContinental Exchange (ICE) also contribute to the dull trading despite strong fundamentals.
Cotton prices have dropped over 10% since the beginning of 2024. The US Department of Agriculture’s Economic Research Service forecasts a decline in global cotton prices for the third consecutive year in 2024-25. Global production is expected to increase by nearly 5%, with significant contributions from Brazil and the US offsetting expected losses in China, India, and Pakistan.
The government has increased the minimum support price (MSP) of cotton for the current crop year to ₹7,121 per quintal from ₹6,620 last year, prompting some mills to resume buying. CCI has sold around 3-4 lakh bales following the MSP hike.
Cotton yarn exports have stabilized at 9-10 crore kg per month, with consistent buying from Bangladesh and Europe expected to continue.
Read More :> Bangladesh and Vietnam Poised to Lead Global Cotton Consumption Growth Over Next Decade
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