Sluggish demand for yarn and garments has caused cotton prices in India to fall below Rs60,000 per candy (356 kg), with expectations of a potential rebound from mid-August. The situation has worsened due to the recent student unrest in Bangladesh that resulted in around 150 deaths. The unrest led to a haltin India’s cotton exports to Bangladesh, notes Ramanuj Das Boob, a Raichur-based sourcing agent for domestic mills and multinationals and Vice-President, All India Cotton Brokers Association.
The decline in demand has also prompted the Cotton Corporation of India (CCI) to reduce its sale price by Rs1,800 per candy. CCI holds around 20 lakh bales (170 kg) of cotton procured under the minimum support price (MSP) scheme.
On the domestic front, Shankar-6, the export benchmark is priced at Rs56,800 per candy. The spot price for kapas (unprocessed cotton) on MCX is Rs1,506.50 per 20 kg, while it is being quoted at Rs7,505 per quintal in the Rajakot Agricultural Produce Marketing Committee Yard (APMC). Globally, cotton prices have dipped below 70 cents per pound, with December delivery on the InterContinental Exchange, New York, priced at 69.01 cents (Rs 45,800 per candy).
K Selvaraju, Secretary-General, Southern India Mills Association (SIMA), points out, cotton imports that attract an 11 per cent Customs duty, are more expensive by Rs5,000-6,000 per candy. This is impacting the industry's competitiveness. Though 2024 is not so bad a year as 2023, the textile sector is yet to recover to the strength seen in 2018-19, he adds.
Globally, demand for cotton remains subdued as yarn and garment offtakehas slowed, notesAnandPopat, a Rajkot-based cotton, yarn and cotton yarn trader. No one wantsto hold supplies in the pipeline asinterest rates are quite high, he adds.
Cotton sowing has decreased by almost 7 per cent, avers Das Boob. This may compel CCI to procure cotton under the MSP program next season, he adds.
