Garment Business News

Low demand pulls down cotton prices

October 18th, 2008

Hindu, India -
M. Soundariya Preetha

COIMBATORE: With the new cotton season (2008-2009) setting in, cotton prices have declined mainly owing to low demand from textile mills.

The prices have declined by about Rs. 4,000 a candy for the Punjab varieties (compared to prices last month) and by 40 per cent for Shankar 6, according to K. N. Viswanathan, secretary of the South India Cotton Association.

Cotton Corporation of India is purchasing 50 to 60 per cent of the arrivals in Punjab since the prices have dipped below the minimum support price. It has started purchasing in Andhra Pradesh and is likely to do so in Maharashtra and Gujarat too. Mr. Viswanathan told The Hindu that the arrivals from Gujarat, Punjab belt, Maharashtra and Andhra Pradesh total to about 85,000 bales a day and this was on the rise. Cotton production in the country last year (2007-2008 cotton year) was 315 lakh bales and the association estimated it to be 318 lakh to 320 lakh bales this year. “Our estimate is conservative since weather can play a crucial role in the arrivals in Maharashtra and Andhra Pradesh next month,” he said.

However, currently “there is absolutely no enquiry for cotton export and the domestic mills are unable to support the prices,” he said.

Unviable yarn prices, lack of movement of yarn and the poor buying capacity of the mills were some of the reasons for the low demand.

Exporting companies who had got cotton for November-December delivery were settling the contracts now since the demand was low in the international market too.

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