Trade calls for suspension of cotton futures

By on January 9, 2022 0

The textile value chain is feeling the heat of soaring cotton prices. The price of ginned cotton for the 29mm variety, which was listed at 55,000 per candy (356 kg each) on Oct. 5, 2021, jumped 31% to a record 72,000 now.

With no respite for prices in sight, the industry is seeking government intervention to curb the surge in prices by imposing measures such as the temporary suspension of cotton futures trading on the stock exchanges.

The most expensive fiber

“At this rate, Indian cotton is now the most expensive in the world. It also places a financial burden on the millers and ginners. We believe that restricting cotton futures for at least a month will moderate the price increase. And once the prices stabilize and start to fall, we will see more arrivals in the markets, ”said J Thulasidharan, President of the Indian Cotton Federation (ICF). According to trade sources, for the first three months of the 2021-22 cotton marketing year, around 40 percent of the expected 360.13 lakh harvest bales reached the market. The remaining stock would be with farmers who anticipate raw cotton (Kapas) Prices will rise further from their current levels of 10,010 per quintal in Rajkot markets earlier this week.

The main textile player, the chairman of TT Limited, Rikhab C Jain, wrote to Prime Minister Narendra Modi on Wednesday asking for his intervention in order to take action to curb the price hike. In his letter, Jain noted that cotton prices were skyrocketing despite “the unprecedented best harvest without damage.”

Speculative activities

He alleged that the rise in prices is mainly due to speculative transactions by multinational companies, holding the shares, and Indian speculators who engage in lucrative activities at the expense of the textile industry. “The government must take immediate action. Otherwise, the looms sector, the hosiery sector and the garment industry are about to come to a screeching halt, ”he said, asking the prime minister for immediate action to stop the blanket and kapa trading by speculators on commodity exchanges such as Multi Commodity Exchange and New York. Cotton Exchange (NYCE).

Notably, this demand for restrictions on cotton futures trading comes after the Tirupur Exporters Association raised its demand earlier this week for the removal of the 11 percent import tariff on cotton.

“The import duty hurts sentiment. Once it is removed, it will increase sentiment and also help lower prices, ”said Thulasidharan, who is also managing director of The Rajaratna Mills Ltd in Coimbatore.

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