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Revised closing stock figures turnout to be worry for textile industry

20 Apr 2012 Evaluate

Revised figure from the Cotton Advisory Board has turn out to be a storm for the textile industry as the Board projected the closing stock for this season ending September at 25.1 lakh bales (of 170 kg each) which is seen as a worrying issue for the textile space. This is equal to five-six weeks’ consumption and for a healthy survival of the textile industry, stock that can last 10 weeks is required.

The projection of closing stock made by the Board, which has representation from growers, traders, exporters, textile mills and the government, has witnessed steep fall from its past estimation of 55.3 lakh bales made on January 24, 2012. Besides, the Board raised the crop projection to 347 lakh bales (345 lakh bales) while export has been estimated to 115 lakh bales (84 lakh bales). As a result, demand or disappearance has been projected at 367 lakh bales against a previous estimate of 344 lakh bales.

The higher estimate of disappearance is on the back of record export of 115 lakh bales. Cotton consumption by large textile mills this season has been trimmed to 211 lakh bales from 215 lakh bales and that of small mills to 21 lakh bales from 24 lakh bales. However, what seem to have sparked a controversy are figures put out for last season that ended in September.

Last year’s exports have now been pegged at 78 lakh bales against 68.8 lakh fixed in January. The Board has pegged last season’s export higher based on actual physical exports data sent by the Commerce Ministry. In view of this, the closing stock of last season has now been put at 39.1 lakh bales against 48.3 lakh bales. Subsequently, last season’s disappearance has been revised upwards to 345.5 lakh bales.

The Board figures are the latest issue on which the government, the trade and exporters are at loggerheads. Already, the government, on one side, and traders & exporters, on the other, are locked in a clash over the ban on exports. The Centre initially banned exports in March. However, following protests from growers and traders, it decided to allow only those quantities that had been registered for exports. It is still firm in not giving permission to new registrations for cotton shipments.

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