Cotton Firms Up, Cloth Stagnant

A firm tendency prevailed on the Mumbai cotton market last week. With declining inflows, sellers were unwilling to part with stocks at lower rates and demanded higher prices. Mills had to resort to more purchases due to the approaching monsoon for building up inventory. But, routine day to day purchases continued. Earlier, when 25,000 bales were received in Punjab, mills were lifting not more than 10,000 bales. But, now mills are not in a position to get even 5,000 bales as Punjab supplies are hardly 1,200-1,300 bales.

Even these supplies would dry up soon. The inflows in Gujarat had been declining with negligible receipts of Shankar-four and g-12 varieties.

At present, the inflows pertained to kalyan, waghad and kala. The largest stock holder is the Maharashtra Federation, but with the recent rise in prices, the mills' demand for cotton was poor. The federation is likely to follow the policy of hiking prices in line with the open market. Mills, however, later in the season, would have no option but to approach the federation for their requirements.

Overall, the cloth production was higher than the target fixed for 1995-96. However, cotton cloth production, especially by the mills was declining, while more units of synthetics powerlooms were growing. Consequently, rise in production had been more pronounced in polyester and blended cloth.

At the same time, export demand for yarn had been good with cotton yarn in the limelight. Overall, cotton supplies were comfortable Therefore, mills refrained from building up larger inventory and had to buy cotton at higher prices.

Punjab saw gin was up Rs 30 per Bengal maund at Rs 1,675-1,700 and F-414 at Rs 1,980-2,000.

Gujarat kala gained Rs 300 at Rs 12,500 per candy. Kalyan was demanded higher at Rs 14,000-14,600 and waghad at Rs 12,750-13,000 per candy. Shankar-four was demanded between Rs 17,500 and Rs 20,500.

Cloth weekly: There was little change in the activity of either wholesale or retail markets in Mumbai last week.

However, the marriage season demand at upcountry centres were satisfactory with buying of sarees, suitings and shirtings at various places. Good demand persisted in Bhilwara for suitings and shirtings from all over the country. However, prices at the upcountry centres ruled steady at the current slightly higher levels. Traders are only willing to reduce the stocks on hand and wait for demand to pick up before making fresh purchases. In view of the cricket match and slack demand here, traders passed the week in dismay.

In the absence of fresh demand from semi-wholesale and retail traders, the view was that the seasonal demand, at least here, had already ended. With poor buying, upcountry traders were clearing the outstanding positions. Hence, paucity of funds had aggravated in the city.

Traders are keen on offering at current levels and refrained from purchasing fresh cloth from mills, paying higher prices. It would be difficult for them to sell high priced cloth in competition with the cheaper powerloom and process-house cloth.

esides, more consumers are resorting to ready-made garments. Traders are also worried about the likely decision of the Union government to hike the prices of various oil products. This will ultimately increase the prices of various raw materials and the cost of cloth will also go up.

Demand too would be affected due to price rise of everyday items. Traders are also disappointed with factors like transport strike and political uncertainty at the Centre which have led to paucity of funds. The season hardly lasted for a month and now traders have to live with poor demand during monsoon. Only in Shravan, some revival in demand is expected.