An analysis of trend of cotton prices from 2004-05 to 2007-08 distinctly establishes the link between stock to use ratio and cotton prices. In the cotton season 2004-05, the stock to use ratio was 37%.
Consequently, cotton prices during the season 2004-05 was stable at reasonable level. In the subsequent cotton seasons, 2005-06 to 2007-08, stock to use ratio progressively declined from 24% in 2005-06 to 21% in 2006-07 and to 18% in the current season, 2007-08.
The depletion in the stock to use ratio came about on account of rising exports of raw cotton – 47 lakh bales in 2005-06, 58 lakh bales in 2006-07 and a record exports of 85 lakh bales in 2007-08.
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Southern India Mills' Association (Sima)
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