Spinners Association Gujarat (SAG) estimates that the cotton prices in Gujarat might fall below Rs. 60,000 a candy by December 2022. After reaching a record Rs.1.10 lakhs per candy, cotton prices are registering a slump in recent months. Gujarat, the largest cotton producer, uses bales (each of 170 kg) for cotton procurement from markets, while kapas (raw, unginned cotton) is weighed in quintals. Ginned cotton is quoted in candies (355.62 kg each).
Gradually over the recent months, the Cotton prices have come down to about Rs 80,000-Rs 85,000 per candy and the forward booking for October-November is being transacted at Rs. 60000-68000 per candy.
The fall is ascribed to two reasons where one is naturally the decreased demand and the second is the wait-and-watch policy of market players who refrain from making bigger deals in face of falling prices. The good harvest is expected to bring down the prices further, it is believed.
The exorbitant prices witnessed earlier had a malefic effect on the textile industry. Spinning mills are said to have incurred losses up to Rs. 40 per kg due to the high price of cotton. Weaving and processing units too were heavily impacted.
Once the prices stabilize and the demand picks up, it will help the textile value chain recover from the difficulties it faced recently. The banks also might see heavy outgo of funds and lending increase as the traders with unutilized cash credit and overdraft limits will try to hold as much as they can of the cotton stock at the lower rate.