Cotton arrival is much lesser than its usual: SIMA

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May 30, 2023 The chairman of the Southern India Mills’ Association (SIMA) Ravi Sam said that the arrival of cotton during the current season was less than 60% against its usual arrival during the season which is 85% - 90%.

He said, “The abnormal month on month kapas price prevailed during the previous year made the farmers and kapas traders to hold over 47% of the cotton with a hope of abnormal price increase despite the cotton corporation of India’s announcement regarding the closure of MSP operations on March 31.”

According to a statement from SIMA, kapas cost is Rs 9,000 per quintal between December and February last year despite daily arrival rate of 1.32 to 2.2 lakh bales and its cost increased to Rs 11,000 per quintal in April 2022. The daily arrival rate during the peak season was the lowest during the current cotton season with just 1 to 1.3 lakh bales.

Sam said, “The global cotton price fell from 118 to 164 cents per pound between October, 2021 and May, 2022 and has already gone below 100 cents per pound, generating a panic situation in the cotton value chain. The Indian cotton trade took an advantage of the 11% import levy and kept domestic prices up by 8% to 15%. This was the primary reason for the considerable decrease in cotton textile and garment exports.”

“When manufacturing capacity across the cotton textile value chain decreased by 30%, so did demand for domestic cotton. Cotton prices, which were Rs 62,000 per candy on May 2, 2023, are expected to rise and are currently priced at Rs 56,500 per candy. The price of kapas has also reduced to Rs 7,000 per quintal, from Rs 8,200 per quintal from December to February,” he added.

The COCPC has estimated 337 lakh bales as the crop size for the cotton season 2022-23, and around 272 lakh bales have arrived in the market, thus the same rate of arrival is expected through the end of June, he said, adding that the summer harvest seeded in Tamil Nadu and a few other states could total 10 lakh bales in the coming months.

Since cotton ginning would be difficult during the wet season, farmers should sell their available cotton to earn better rates, he said, cautioning that cotton quality may deteriorate during the wet season, resulting in a low price.

He also said that the global cotton season would begin in August and that cotton prices would remain stable in the coming months. However, cotton scarcity may occur at the end and beginning of the season until new cotton comes, he added.

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