Possible import duty cut will depress cotton prices further
28 Feb '06
1 min read
Cultivators of extra-long staple (ELS) cotton are depressed due to falling prices since last two months whereas world prices have strengthened due to production decline.
If Finance Minister, P. Chidambaram, withdraws the existing 10 per cent customs duty on cotton imports, it would further put pressure on prices, sources said.
ELS spot rates have dipped by almost 25 per cent since December though output has declined in Karnataka from one lakh bales last year to about 40,000 bales this season.
Spot rate for DCH-32 (34-35 mm) has declined from Rs 45,000 a candy in December to Rs 35,000 this month.
It is believed the price decline is artificial and mills are postponing purchases hoping for further decline in market.
Abolition of import duty on cotton will further depress market and make ELS growing unviable in country, sources said.
Shortage of ELS cotton in the world market has pushed up world prices of ELS to around 125 cents a pound.
Mills will be able to benefit by duty-exemption scheme if import of ELS cotton is meant for production of export goods.
marketing@alchempro.com
