Prices up 31% in first three months of the 2021-22 cotton season
Textile value chain is feeling the heat of spiralling cotton prices. The ginned cotton price for 29 mm variety, which was quoted ₹55,000 a candy (each of 356 kg) on October 5, 2021, has jumped by 31 per cent to touch a record high of ₹72,000 now.
With no respite for prices in sight, the industry is seeking government intervention to rein in the spiralling prices by imposing measures such as temporary suspension of cotton futures trades on exchanges.
“At this rate, Indian cotton is now costliest in the world. This causes cost burden for millers and the ginners too. We believe restricting cotton futures at least for a month’s time, will ease out the price rise. And once the prices stabilise and start sinking, we will see more arrivals in the markets,” said J Thulasidharan, President, Indian Cotton Federation (ICF). According to the trade sources, for the first three months of the cotton marketing year 2021-22, about 40 per cent of the projected 360.13 lakh bales of crop has arrived in the market. The remaining stock is said to be with the farmers who are anticipating raw cotton (Kapas) prices to further go up from its current levels of ₹10,010 a quintal in Rajkot markets earlier this week.
Leading textile player, TT Limited’s Chairman, Rikhab C Jain on Wednesday wrote a letter to the Prime Minister Narendra Modi seeking his intervention to initiate measures to curb the price rise. In his letter, Jain has noted that the cotton prices were sky-rocketing despite “unprecedented best damage-free crop”.
He alleged that the price hike is primarily due to the speculative trades by multi-national companies, holding the stocks, and Indian speculators indulging into money-making at the cost of textile industry. “Government needs to take immediate action. O therwise, powerloom sector, hosiery sector and apparel industry is about to come to a grinding halt,” he said requesting the Prime Minister for immediate action to stop hedging and trading of kapas by speculators on commodity exchanges such as Multi Commodity Exchange and New York Cotton Exchange (NYCE).
Notably, this demand for restrictions on cotton futures trading comes after Tirupur Exporters’ Association raised their demand earlier this week for removal of 11 per cent import duty on cotton.
“The import duty is hurting the sentiment. Once it is removed, it will lift the sentiment and also help in easing the prices,” said Thulasidharan, who is also Managing Director of The Rajaratna Mills Ltd in Coimbatore.