Indian Cotton Market Sits at a Standstill
May 10, 2011 By Seshadri Ramkumar
Texas Tech University, USA
There has been no trading in the Indian cotton market since May 6 which is resulting in serious sliding of cotton prices.
There is a total absence of buying, said Mr. K. N. Viswanathan, Honorary Secretary of The South India Cotton Association based in Coimbatore, India. Mr. Viswanathan says there are some important factors causing this price crash. Over-stocking of cotton in anticipation of higher prices on speculative basis and a lack of buying upstream have caused this situation, according to Mr. Viswanathan.
The cotton yarn market is at a standstill due to processing house closures in Tiruppur area in South India. Furthermore, the spinning industry is facing serious power shortages. Cotton spinners are facing an uphill battle in selling yarn to weaving units.
Sankar-6 benchmark cotton traded last Friday at Rupees 44,000 per candy (356 kg). It is now at Rupees 41,000-42,000 per candy with no takers. India is a 24/7 market and no trading has occurred since last Friday, said Mr. Viswanathan.
Commenting on India’s cotton production for this season, he said his association estimates the production to be 31.2 million bales (170 kg each), which is the estimate provided by India’s Cotton Advisory Board. He feels this season’s production will lie between 30.5 million to 31.2 million bales. According to Mr. Viswanathan, arrivals since the beginning of this season until May 1 have been 28.7 million bales (170 kg each). He expects the daily arrivals for the next 30-35 days to be 45,000 bales per day. In a telephone conversation from New Delhi, India, Mr. V. Srinivas, Joint Secretary, Ministry of Textiles, India confirmed that the production estimate for this season still stands at 31.2 million bales. Mr. B. A. Patel, Joint Textile Commissioner, India, says there has been no revision to the latest Cotton Advisory Board’s estimate of 31.2 million bales of 170 kg each.
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