Cotton Association of India (CAI) has objected the latest crop data dated 15th June, 2020 published by United States Department of Agriculture (USDA) showing excessively high carry-over stock of Indian cotton at the end of July 2020 which seems to have depressed the prices of Indian cotton globally.
USDA in its report has shown carryover stock of 19 million US size bales as on 31st July 2020 which is equivalent to about 244 lakh Indian size bales of 170 kgs each. If we reduce two months’ consumption by Indian mills for August and September 2020 from the said USDA stock, the carry over stock of Indian cotton works out to about 200 lakh bales as on 30th September 2020 as against 50 lakh bales estimated by the Cotton Corporation of India (CCI). Cotton Advisory Board has also estimated carry-over stock of Indian cotton as on 30th September 2020 at 48.41 lakh bales.
The carry over stock estimated by USDA is astronomically high which is creating a perception in the international market that there is a glut in Indian cotton. Due to this, buyers are confused and reluctant to buy. Further, it has depressed the prices of Indian cotton. Indian cotton which is used to trade at a premium on ICE is currently trading at heavy discount.
Last year this time Indian cotton prices were ruling higher at Rs. 45,000/- per candy while Imported cotton prices were Rs. 42,000/- per candy. However, this year, situation is different. Indian Cotton prices this year are depressed and are ruling below Rs. 35,000/- per candy discounted by over Rs. 7,000/- per candy whereas imported cotton prices are ruling at Rs. 42,000/- per candy. So, compared to last year, Indian cotton prices are now cheaper by over Rs. 10,000/- vis-à-vis imported cotton.
Depressed prices of Indian cotton are causing huge losses to all stake holders of the Indian cotton value chain. Farmers who are holding about 10 lakh bales kapas, Ginning & Pressing factories and the Government agencies which are carrying a huge stock of over 102 lakh bales procured under MSP operations. Depressed cotton prices are also adversely impacting yarn prices and causing losses to the Indian textile mills and garment manufacturers who are also suffering losses in export market.
The CAI has therefore urged the Government to intervene in the matter and undertake an exercise of reconciling cotton stock with USDA to arrest further damage being caused to the Indian Cotton sector.
|Mumbai||(Atul S. Ganatra)|
|9th July 2020||President|