A flare up in domestic as well as global cotton prices has started giving sleepless nights to the cotton based knitwear and wovenwear export industry in the country, since orders are taken months in advance and no one expected cotton prices to surge to these heights.
In the last few fortnights, prices of cotton have augmented by 25-30 percent and have completely skewed up the costing of apparel manufacturers and in the process affecting the bottom lines of many producers.
Experts aver that cotton prices have gone up on news of a decline in global output in the current cotton year and has created a multiplier effect on prices of yarn and in turn fabrics, which is the main raw material of clothing sector.
Estimates indicate that, world cotton production is likely to dip by 5 percent to 22.2 million tons in the 2009-10 season from 23.4 million tons last season. High demand for cotton in China, the strongest textiles player, is partly responsible for the cotton price surge.
A garment exporter commenting on the situation said, "We are now buying yarn against export orders that we received two months ago, based on the market price that prevailed at the time. So if prices increase exorbitantly, how can we deliver the orders?"
Fibre2fashion News Desk - India
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