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“Comparative quality of American cotton is available at 5-10 percent lower prices in the international markets. The major purchaser of cotton since the beginning of the new cotton season has been the government owned Cotton Corporation of India (CCI) which is procuring around 70,000 bales (1 bale = 170 kg) daily..
“But the rest of the real consumers, the textile mills are buying cotton on a hand to mouth basis only. In normal circumstances, these textile mills purchase their annual requirement of cotton within the first 5-6 months of the new cotton season, but this year they are adopting a wait and watch attitude in anticipation of a drop in cotton prices..
“Exports of cotton have also been affected due to this disparity in domestic and international prices. India which exported a record figure of cotton in the last year will see shipments of the white gold falling sharply in the current year. There is also a likelihood of an artificial scarcity being created of cotton in India..
“The reason being that CCI is the only major purchaser of cotton in India in the new season. And it has not yet begun selling the procured cotton, since its purchase price is at a disparity to the prevailing international prices and if it does so, will have to incur a loss. The CCI has till date purchased around 47 lakh bales from the open market..
Date:3/15/2009
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