According to foreign reports, in the first three months of 2021/22 (October-December 2021), Indian cotton futures rose by 31%, from 55,000 rupees/kander (356 kg) on October 5, 2021 to 72,000 rupees /Kander’s all-time high.
With no respite in sight for prices, the Indian industry is seeking government intervention to curb rising prices by implementing measures such as suspending trading of cotton futures on exchanges.
The Indian Cotton Federation (ICF) president said Indian cotton is now the most expensive cotton in the world, putting a cost burden on textile mills and ginners. The government should limit cotton futures for at least a month to mitigate price increases.
In the first three months of 2021/22, about 40% of the estimated 36.013 million bales of the crop have entered the market. The remaining stocks are said to be in the hands of cotton farmers, who expect raw cotton prices to rise further from the current level of Rs 10,010 per quintal.
TT Textile Ltd has written to Prime Minister Narendra Modi urging the government to take measures to curb price rise. The company said that the price increase is mainly due to speculation by multinational companies holding cotton stocks and the Indian industry, and the government needs to stop traders from speculating and hedging transactions in India’s MCDEX and ICE cotton futures.
At the same time, in order to avoid excessive speculation in the market, the South India Textile Mills Association urged the Prime Minister to cancel the 11% import tariff on cotton. Industry organizations say that cotton imports into India account for only 4-5% of domestic consumption. Textile mills usually only import appropriate amounts of foreign cotton during the off-season or when domestic prices are much higher than international cotton prices. Therefore, there is no need to impose an 11% levy on cotton imports. The tariffs will not have any adverse impact on cotton farmers after they are removed.
In 2021/22, the opening inventory of Indian cotton is 7.5 million bales, plus the production of approximately 36 million bales. The domestic cotton supply is quite sufficient. However, due to unprecedented fluctuations in international cotton prices, coupled with the concentration of pent-up cotton demand after the epidemic, Released, so Indian cotton prices started surging from the beginning of the year.
According to the South India Textile Mills Association, the current premium for high-grade cotton in India reaches 5-7%. Since cotton farmers are holding on to cotton for rising prices, it is difficult for textile mills to find suitable cotton. If cotton import tariffs are not immediately lifted, the price premium for high-grade cotton in India will increase in the next few months. India’s cotton textile industry chain may come to a standstill.
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