SIMA tells cotton farmers to dispose of held back stocks ahead of monsoon

The South Indian Mills Association (SIMA), the apex body for spinning mills in South India, has asked farmers to dump Stocks of cotton they keep Before the monsoons start to bring in better prices. “It will be difficult to gin cotton during the rainy season,” said Ravi Sam, Chairman of SIMA. Besides, the quality of cotton may deteriorate during the rainy season and prices fall.

But he said cotton prices are expected to prevail at current rates until the end of June.

Estimation of the cotton yield

cotton prices, which was ruling at ₹62,000 (356 kg) candies on 2 May, is now quoted at ₹56,500. Kapas (cotton seed) prices fell to $7,000 a quintal against more than €8,200 from December 2022 to February 2023. However, prices are 11 percent higher than the minimum support price of €6,080.

Also read: Cotton acreage in northern India may remain at last year’s levels

According to the Cotton Production and Consumption Commission, the cotton harvest this season is estimated at 337 lakh bales. Of this, 272 bales reached the market. He said that about 10 bales of summer cotton, grown in Tamil Nadu and a few other states, are likely to arrive in the next few months.

During the current cotton season through September, the arrival of cotton through March 31 was 60 percent less. Over the past several decades, usually 85-90 percent of the crop arrives by March 31st.

47% of the crop is declining

Farmers stopped producing them this year because prices were abnormal last season. Farmers expected better prices, and stocked their produce on their porches and in their backyards. “Farmers and kappas traders held more than 47 percent of the cotton, hoping for higher prices like last year,” Sam said.

Prices for kapas (seed cotton) prevailed around Rs 9,000 quintals during the peak arrival season from December to February in the 2021-22 season despite daily arrivals of 1.32 to 2.2 bales (170 kg). Prices are above INR 11,000 during April 2022.

On the other hand, daily Cotton arrival It was one of the lowest rates in the current season at 1-1.3 lakh bales. During the same time, global cotton prices fell below 100 US cents per pound, triggering panic in the cotton value chain.

A shortage is likely during the end of the season

On the other hand, the head of the authority urged the center to allow the import of long-staple cotton (ELS). No customs duties. Currently, cotton imports attract 11 percent duties. Last year, ELS cotton was allowed to be imported duty-free between April and October.

With the start of the global cotton season in August, global cotton prices are expected to stabilize in the coming months. “However, the industry may face a shortage of cotton during the end of the season and the start of the next season until the new cotton crop hits the market,” he said, justifying his plea for duty-free imports.

Also read: CAI reduces the cotton crop volume to 298.65 bales

The SIMA chief said that the Indian cotton trade benefits from the 11 percent tariff to keep domestic prices 8-15 percent higher and this was the root cause of the significant decline in exports of cotton textiles and garments from India.

Reasons for the price collapse

Referring to lower prices, he said that demand for cotton has fallen since April 2022 due to inflation in major importing countries. Cotton textile exports fell to $143.87 billion in 2022 from $154 billion in 2021 and $170 billion in 2020 to major markets,” Sam said.

He said India’s total exports of textiles and allied products, which amounted to $42.9 billion during 2021-22, fell to $35.4 billion during 2022-23 as a result of stagnant demand.

Also read: Indian cotton exports may fall to their lowest level in 19 years

SIMA Chairman said in a statement that exports of cotton yarn fell by about 50 percent, while exports of cotton fabrics and compounds fell by 17 percent, and shipments of raw cotton fell by 73 percent during 2022-23 compared to 2021-22. .

He said that production capacity across the cotton textile value chain decreased by 30 percent, which led to a decrease in demand for locally grown cotton, which led to a significant drop in cotton prices this month.