India : Mills Worried Over Shortage Of Quality Cotton

``Not only in the domestic arena but also in the global market there is shortage of quality cotton. In the US too, at least 30 per cent of the crop has been hit due to drought,'' industry sources told reporters.

India is one of the largest importers of US cotton while its other sources are West Africa, Australia and Egypt.

Mr D.K. Nair, Secretary-General, Indian Cotton Mills Federation, said: ``Currently, prices are high and they are increasing. Along with this, there are complaints of decline in quality, which is worrying the industry.''

Currently, Punjab J-34 is ruling around Rs 17,623 per candy (of 365 kg) against Rs 16,600 in December and Rs 15,500 October, the start of the crop season.

Similarly, the popular DCH-32 is ruling at Rs 30,000 per candy against Rs 28,500 in December and Rs 27,500 in October.

Despite the current situation, the industry is of the view that there may not be much of a change in the crop, import and price scenario.

``Prices may surge around April but it is an usual phenomenon as arrivals tend to get over then,'' the sources said.

The industry and trade are divided on the outlook for the textiles sector, particularly in relation to cotton availability.

While traders say cotton output could be less than 145 lakh bales (of 170 kg each), the industry says it would not be less than the figures projected by the trade.

``The output may not be substantially less than 152 lakh bales. Definitely, it will not be what the trade projects,'' the sources said.

One section of the trade has put the output at around 142 lakh bales. The projections are against the estimates made by the Cotton Advisory Board (CAB) of 152 lakh bales in November 2002. Last season (October 2001-September 2002), the production was 158 lakh bales.

``The lower projections are based on lower arrivals from Maharashtra. The crop has been lower in Punjab, Rajasthan, Madhya Pradesh, Karnataka and Tamil Nadu too,'' trade sources said.

A final picture is likely to be available when CAB, a body comprising mills, growers, trade and the Government officials, meets during the month-end to take stock of the situation.

In view of the current crop situation, the trade feels there could be a rise in imports from April. But the industry says it may not happen.

``No one will go in for contracts to import from April. That is like hurting one's own prospects,'' the industry sources said.

``Moreover, international prices are higher than domestic prices and it makes sense not to import.'' An industry source said the trade was trying to cash in on the current high price. ``Next year, the prices are bound to fall as we expect the crop to be high. So, all this talk of rising imports, firm prices are all to keep the prices at the current level,'' the sources said.

Currently, international prices are 10-15 per cent higher than domestic prices.

While trade sources say imports could touch around 15 lakh bales during April-June, industry sources say going by the current trends, the CAB estimate of 20 lakh bales could prove right.

``Imports will be around 18-20 lakh bales only,'' the industry sources said. The projections are against 24.70 lakh bales imported last season.