INDIA: Rising Cotton Prices Impact Textile Sector This Year
Soaring domestic cotton prices have hit the textile sector this year with mills struggling to achieve a breakeven, the Southern India Mills Association (SIMA) has said. The cotton price spiral and short supply in quality cotton have occurred on account of abnormal increase in cotton exports which again, according to…
Egytex News Desk
Egytex
Analyzing the trends of cotton prices that carry over stock positions for the cotton seasons from 2004-05 up to the current 2007-08 season, the apex textile body said the closing stocks as a percentage to the consumption demand has a bearing on cotton price prevalence. The stock-to-use cotton ratio, for example, for the season 2004-05 when it had its closing stocks at a comfortable 72 lakh bales, stood a healthy 37 per cent leading as a consequence to a stable domestic cotton prices during that period.
That year the cotton export from India was hardly nine lakh bales. The SIMA analyzed into subsequent cotton seasons and noted the carry over stock of cotton showing a steady decline leading to corresponding erosion in the stock-to-use cotton ratio as well.
“Cotton being a seasonal commodity and, hence, purely depends on the monsoon, it is essential the country maintained a comfortable buffer to manage unforeseen conditions and meet domestic industries’ needs. A minimum of 25 per cent stock-to-use cotton ratio is crucial for healthy development of domestic textile industry”, Dr Srinivasan added.
Source: Hindu
From the Egytex news archive, first published on 23 June 2008. Figures and names are as reported at the time.
