Cotton rates surge, mills switch to other materials

Amid criticism over the Centre’s move to allow cotton exports, cotton prices have surged by over Rs 400 a quintal on account of low arrivals from producing areas and strong demand from textile mills in Punjab and Haryana.

Though the spurt in rates has brought cheer to cotton growers, garment makers have resorted to using polyester yarn and other materials to reduce their consumption of cotton and rein in input costs.

The prices of ginned cotton have gone up to Rs 4,000- 4,005 per maund (37.324 kg) in comparison to Rs 3,710-3,730 per maund a week ago. Similarly, prices of raw cotton have risen to Rs 4,200-4,400 a quintal from Rs 3,600-4,000 a quintal in the previous week, traders said.

 

“Prices are rising by Rs 20 per maund every day without any disruption,” traders said. “The main reason behind the fresh spurt seen in cotton rates is the delayed arrival of crop and purchasing by spinning mills which have low cotton inventory,” Northern India Cotton Association President Rakesh Rathi said today.

Asserting there was no shortage of cotton crop as claimed by spinning mills, Rathi further ruled out the possibility of a further spurt in cotton rates due to increasing crop arrivals in the coming days, thanks to the good monsoon this year.

“Farmers are not holding up their crop as they are already fetching very good rates for their crop this time. In the next few days, the daily crop arrival will pick up considerably,” asserted Rathi.

Cotton arrivals in Punjab and Haryana stand at just 180,000 bales in the current year so far as against 400,000 bales in the corresponding period of the previous year.

Blaming the Centre for its “irrational” move to allow cotton exports, spinning and garment makers have increased the blend of polyester with cotton in their products to reduce cotton consumption.

“Industry is reducing cotton consumption by way of using polyester so as to lessen the impact of rising cotton rates,” Vardhman Textiles Corporate General Manager I J Dhuria said.

With the increased use of polyester, its rates have also moved northward. “Polyester prices have also surged by 15 per cent in the last one month,” he said.

Punjab and Haryana this year brought 530,000 hectares and 474,000 hectares of polyester, respectively. Cotton production in Punjab is pegged at 2.276 million bales this year, while output in Haryana is expected to amount to 1.89 million bales.