The Cotton Association of India (CAI) has objected the latest crop data, dated June 15, published by the US Department of Agriculture (USDA), showing an excessively high carry-over stock of Indian cotton at the end of July, which seems to have depressed the prices of Indian cotton globally.
The USDA report has shown carry-over stock of 19 million US size bales as on July 31, which is equivalent to about 244 lakh Indian size bales of 170 kg each.
The CAI says that if the USDA data is taken into consideration and local mills” consumption of cotton for next two months (August and September) is removed from it, the balance stock at the end of the season on September 30 would be about 200 lakh bales against 50 lakh bales estimated by the Cotton Corporation of India (CCI).
The Cotton Advisory Board has also estimated carry-over stock of Indian cotton as on September 30 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,” CAI President Atul Ganatara said in a statement.
He has written a letter to the USDA requesting reconciliation of the carry-over stock.
This time last year, 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, the 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-a-vis imported cotton,” said the industry body.
Depressed prices of Indian cotton are causing huge losses to all stake holders of the Indian cotton value chain, it said.
According to the CAI, 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 the export market.
The CAI has also urged the government to intervene in the matter and undertake an exercise of reconciling cotton stock with the USDA to arrest further damage being caused to the Indian cotton sector.