Indian cotton market at standstill

There has been no trading in the Indian cotton market since this past Friday, May 6th which is resulting in serious sliding of cotton prices. "Total absence of buying", said, Mr. K. N. Viswanathan, Honorary Secretary of The South India Cotton Association based in Coimbatore, India. In speaking to this scribe from India on May 10th, Mr. Viswanathan attributed to some important factors causing this price crash. Over stocking of cotton in anticipation of higher prices on speculative basis and lack of buying upstream have caused this situation, according to Mr. Viswanathan.

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 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 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 till May 1st 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 told this scribe in a call from Mumbai that there has been no revision to the latest Cotton Advisory Board’s estimate of 31.2 million bales of 170 kg each.