Cotton trade system Cotton Affiliation of India (CAI) has lifted significant objection about the US Division of Agriculture’s (USDA) evaluation of India’s cotton inventory positions alleging a deceptive portrayal of India’s cotton current market in the global current market.
In its India-particular Cotton and Merchandise update for June 2020, the USDA has estimated a cotton carryover inventory of 19.eight million US bales (each individual of 480-lb) as on July 2020. This operates out to an equivalent to about 244 lakh bales (of one hundred seventy kgs each individual). The CAI termed it ‘astronomically high’ determine from the reality.
“The carryover inventory estimated by USDA is astronomically higher which is building a perception in the global current market that there is a glut in Indian cotton. Because of to this, prospective buyers get confused and reluctant to purchase,” explained Atul Ganatra, President, CAI.
This is not the first time when the CAI has lifted an objection to USDA’s estimates. Very last calendar year, the CAI had objected to USDA’s cotton crop estimates, which projected India’s cotton crop at 345.25 lakh bales for the calendar year 2018-19, as against CAI’s personal crop estimate of 321 lakh bales.
In a letter to USDA, Ganatra educated that the two the Cotton Company of India (CCI) and CAI have estimated the carryover inventory of Indian cotton at 50 lakh bales as on September thirty, 2020 as against the inventory estimates of 200 lakh bales by the USDA. The Cotton Advisory Board (Taxi) has also estimated the carryover inventory as on September thirty, 2020 at forty eight.forty one lakh bales. He requested the USDA for reconciliation of the carryover inventory details of USDA with CAI.
The explained deceptive USDA cotton inventory figures are explained to have frustrated the Indian cotton rates leading to a decline for the farmers.
Trying to find govt intervention
The CAI has also published a letter to the Union Textile Ministry in search of an intervention in the make a difference and conduct an exercising of reconciling the carry-about inventory with USDA to prohibit the problems.
In the letter dated July eight, Ganatra said that the USDA’s figures are “..completely misplaced and artificially depressing the rates of Indian cotton in the global markets. Indian cotton, which, on an ordinary, employed to trade at a top quality of about 200 details on ICE, is currently buying and selling at a price reduction of about 600 details on ICE.”
“We apprehend that this phony propaganda of demonstrating excessively higher carry‐over inventory of Indian cotton looks to have been undertaken with the ulterior motive of depressing and derailing the rates of Indian cotton. This apprehension, if correct, will induce a enormous problems to the total cotton and textile price chain of India,” Ganatra alleged.
Ganatra added that the frustrated rates of Indian cotton are triggering enormous losses to all stake holders of the Indian cotton price chain. Farmers are keeping about ten lakh bales of raw cotton (kapas), Ginning & Pressing factories and the govt companies are keeping the inventory of about 102 lakh bales procured beneath MSP operations.
He said that the cotton rates last calendar year ended up quoted at ₹45,000 for every sweet of ginned cotton (each individual of 356 kg) whilst the imported cotton quoted at close to ₹42,000.
Decline to textile mills
“However, this calendar year, the problem is diverse. Indian cotton rates are quoting at beneath ₹35,000 for every sweet – which is a discounted price by additional than ₹7,000 as against the imported cotton rates. So, when compared to last calendar year, Indian cotton rates are now much less expensive by about ₹10,000,” explained Ganatra, incorporating that as against a top quality on ICE, Indian cotton are currently buying and selling at heavy price reduction.
The frustrated cotton rates are also adversely impacting yarn rates and triggering losses to the Indian textile mills and garment makers who are also suffering losses in export current market.