Tag: cotton

ICRA revises India’s cotton outlook to stable from negative

ICRA revises India’s cotton outlook to stable from negative

30/06/2017 12:00

Favourable weather conditions and remunerative prices are expected to improve the cotton supply situation in India in the next one year, ICRA said, revising its outlook for cotton to stable from negative.

The rating agency estimates the domestic cotton output to increase by around 6 per cent to 36 million bales in 2018.

“A few initial weeks of the cotton sowing season have already witnessed increased acreage vis-a-vis last year and the trend is expected to sustain. This is likely to be complemented by the forecast for normal monsoons, with the possibility of El Nino formation gradually waning,” ICRA said.

India’s cotton-spinning industry has been facing twin challenges of subdued demand and high cotton fibre prices as a result of tight cotton availability since the July 2016. Amid a decline in exports to China and subdued domestic demand following the demonetisation drive, the growth in total spun yarn production declined to a five-year low in 2016-17.

“The expectations of higher output in the upcoming cotton season supported by increased sowing and a favourable monsoon forecast is likely to create a downward bias in cotton prices from Q2 FY2018 onwards, vis-a-vis the peak levels witnessed during the past one year. This augurs well for the domestic cotton spinning industry,” said Jayanta Roy, Senior Vice- President and Group Head, Corporate Sector Ratings, ICRA.

According to the rating agency, despite the weakness in production and sales volumes, domestic cotton yarn prices continue to be firm following the high cotton prices. However, the possibility of a further increase in cotton yarn prices is low due to weak export prospects.

Advertisements
Sharp rise in cotton prices to hurt ginners and spinners profitability

Sharp rise in cotton prices to hurt ginners and spinners profitability

21/07/2016 12:54

The sharp rise of over 35 per cent in domestic cotton prices since May 2016 will squeeze ginners and spinners profitability by over 15 per cent, says India Ratings and Research (Ind-Ra), a leading rating agency.

Ind-Ra expects prices to remain elevated around the current levels of Rs 120/kg – Rs 127/kg till the end of the cotton crop year of September 2016.

The spike in cotton prices has been due to the 7.4 per cent yoy fall in its production domestically at 35.2mn bales in Crop Year: October 2015 to September 2016 (CY16), as per the Cotton Advisory Board estimates and globally by 18 per cent yoy to 98.1mn bales in CY16, as per the United States Department of Agriculture.

Ind-Ra expects profitability of pure cotton ginners and spinners will be lower by at least 15 per cent, on account of their inability to pass on this steep increase in cotton prices to their customers, due to decreasing cotton demand and increased competitiveness of manmade fibre.

The increase in prices will impact small textile players the most, since cotton is the key raw material and it will also lower their inventory holding capacity. Ginners and spinners are most likely to be affected, however, some organised spinning units with interchangeability from cotton to blended or manmade yarn, will be able to adapt.

Further, fabric manufacturers are likely to be affected the least, on account of their better interchangeable use of looms. Cotton traders are likely to perform substantially better in CY17, on account of inventory gains from existing stock at lower prices of below Rs 34,000 per candy (one candy is 356 kg) in March (last month of the cotton production season) and having sold at higher realisations of above INR36,000 per candy post May, up to INR42,000 per candy in June.

The lower production of cotton in India is mainly due to two consecutive bad monsoons and damaged cotton crop, caused by the pink bollworm pest in central and southern belt in India and due to whitefly pest attacks in northern India. Ind-Ra expects the acreage under cotton cultivation to fall in CY17 from 119 lakh hectares in CY16 (provisional as per Cotton Advisory Board), despite higher realisations.

Cotton futures trade higher on MCX

Cotton futures trade higher on MCX

22/06/2016 14:25

Cotton futures rebounded strongly at the Multi Commodity Exchange (MCX) as investors and speculators pressed ‘buy’ button amid strong physical demand for this agri commodity in the domestic spot market. Reports of lower acreage of cotton and higher demand from ginning factories also pushed the price rise in spot market.

At MCX, Cotton oil futures for June 2016 contract, at MCX, were trading at Rs. 19190.00 per bale, up by 0.63 per cent after opening at Rs. 19010.00 against the previous closing price of Rs. 19070.00. It touched the intra-day high of Rs. 19190.00 till the trading. (At 2.35 PM today).

Indo Count Ind gets gold seal from Cotton Egypt Association

Indo Count Ind gets gold seal from Cotton Egypt Association

13/06/2016 15:38

Cotton yarn products maker Indo Count Industries Ltd on Monday said it has received Egyptian Cotton Gold Seal from Cotton Egypt Association for being a key supplier to global retailers for Egyptian cotton sheets.

“Cotton Egypt Association has accredited the company with Egyptian Cotton Gold Seal for being a key supplier to global retailers for Egyptian cotton sheets,” Indo Count Industries Ltd said in a filing to the Bombay Stock Exchange on June 13, 2016.

The company further said that, it is the 2nd company in India which has received this gold seal.

The gold seal is authentication to high quality, genunity and its commitment to provide the best to it’s customers, it added.

Meanwhile, shares of the company closed at Rs 910.50 apiece, down 0.50 per cent, from previous close on BSE.

Ikea to increase cotton sourcing from India

Ikea to increase cotton sourcing from India

10/06/2016 14:25

Swedish furniture major IKEA is increasing sourcing of cotton from India for its textile requirements as it gears up to start retail operations there by next year, reported PTI.

The company, which is working with around four lakh farmers in India through local partners under its better cotton initiative (BCI) programme, is sourcing almost one-third of its global requirements from India.

“Till now, IKEA retail was not present in India. Given the retail plan which we have till 2025, obviously sourcing of sustainable textiles from India would increase dramatically even for the local market,” IKEA Cotton Leader Pramod Singh told PTI.

IKEA, which is planning 25 stores in India by 2025, had sourced goods worth 315 million euros from India, in which textiles contributed around 70 per cent.

While he did not share details of cotton sourcing, in 2015, the company had sourced around 35 per cent of its cotton from India followed by Pakistan at 21 per cent.

Asked by how much cotton sourcing from India can increase going forward, Singh said: “If you add the retail expansion in India, the percentage is going to increase and will not remain the same.”

Indian cotton is used by not only Indian suppliers, but IKEA’s suppliers in Bangladesh, he said, adding that “India is the source of one-third cotton of IKEA”.

On whether IKEA would add more farmers in its programme for sustainable sourcing, he said: “The number of farmers who are working in this grid has to be increased because four lakh is not a big number. We intend to bring more and more farmers under our projects and initiatives.”

The company trains farmers under its better practices about traditional and genetically modified cotton seeds and their usage.

Asked whether IKEA would prefer BT or the traditional cotton, he said: “We are technology neutral in this. It depends on the farmer’s choice.”

The company has globally over 100 suppliers for cotton and 11 are from India.

IKEA is the founding member of BCI, which aims to promote measurable improvements in the key environmental and social impact of cotton cultivation worldwide to make it more sustainable.