Strategic Advisor & Independent Director
Former Director at A.T.E.group
With the arrival of the new cotton crop, the cotton prices have started softening gradually. Daily average 5000 to 6000 bales have started arriving from Punjab and Haryana but the demand is subdued as nearly 45%to 50% spinning capacity is not operational. The yarn exports have also been down considerably as both China and Bangladesh have nearly stopped importing yarn. The November prices of cotton are quoted around Rs. 74,000 per Candy which might further come down to around Rs.70,000 in view of lack of demand.
Although globally the cotton crop has been affected in USA, Pakistan and Brazil actually India is expected to have higher crop around 365 lakhs bales as per the estimate as no major adverse issues have come up for the cotton crop so far. The PSF prices have also started coming down gradually although many mills have switched over to PC blends. The declining trend in cotton prices dragged down the price of poly spun and polyester-cotton yarn in north India. Weak buying from weaving industry and price cut in polyester upstream also weakened market mood.
The garment and fabric manufacturers are adopting a wait and watch policy as they want to hold buying till stability returns to the market. This has impacted the yarn market sentiment. The home textile industry continues to be under pressure due to lack of export orders as well as slack domestic demand.
In case of Bangladesh, the declining stocks of raw materials amid commercial banks' unwillingness to open Cs might severely hamper production and exports of textile and apparel items.The production disruption would not only deepen the existing dollar crisis, but also hit export earnings considerably.
In short, both the fibre and yarn markets are experiencing volatility due to drop in the prices. If rain does not create any issues in the next few weeks then India should have very good cotton crop which will boost the sentiment and bring the cotton prices to reasonable levels in future. on the other side industry hopes for demand revival which has been a really serious issue for the last few months.