The calculus of cotton is getting very erratic without clues of future fluctuations. Garment exports have suffered serious drawbacks due to costs and the division that lies between their selling prices, and the instability of raw material costs.
There was an unusual rise in the price of cotton since August 2010. Increase in price is further fueled by natural disasters such as floods and rain in the major cotton producing areas such as Pakistan, China, and slashed crops in Australia. Pakistan, the world's fourth largest cotton cultivator is currently facing a shortfall of 2.5 million bales.
Estimated cotton production in India for 2010-11 is 32.5 million bales, but due to natural calamities, Southern India Mills Association (SIMA) predicts that the output would not exceed 29 million bales.
Price rise will pressurize the input costs impacting the margins. This is expected to be passed on to the ultimate consumers. Fabric costs account for 60-70% of the apparel price. Increase in the price of cotton apparels is also speculated.
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Fibre2fashion News Desk - India
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