Gujarat mills running out of cotton, will have to buy at higher price now

Cotton stock is Gujarat is running out. According to reports from large cotton brokers, at the moment mills in Gujarat are running with very low stock of cotton and few mills are running hand to mouth. Only few mills have 10 to 60 days stocks as per their financial capacity.

Even if one considers 35-40 days average stock is with Gujarat mills, it implies the current stock will run up to 30 July, and mills need to buy at least 3 months of cotton for August, September and October use. That is about 18 lakh bales, but as per brokers as of today stock of cotton bales in Gujarat is 4 lakh bales with ginners, 5 lakh with MNCs and 1 lakh with MCX. A total of only 10 lakh bales and with another 2-3 lakh bales yet to arrive so in total 13 lakh bales will be available.

Of these 13 lakh bales, a minimum of 4-5 lakh bales will go from Gujarat to north mills, south mills and exports. So for Gujarat mills stock left is 8 lakh bales against their need of 18 lakh bales, a shortage of 10 lakh bales for the local mills.

Last year, India imported around 30 lakh bales of which 18 lakh bales was from June to September. But this year, looking at international prices and weak currency, imports appear difficult.

So mills in Gujarat will have to buy cotton at a higher rate locally and buy from other states like Maharashtra, MP, north and Telangana to run their mills in the coming 4-5 months.

According to a latest update from Gujarat government, there are 55 lakh spindles of mills running on cotton system comprising 40 lakh new spindles and 15 lakh old spindles. Thus, mills annual cotton consumption is around 70 -72 lakh bales or about 6 lakh bales on monthly basis. There are few more new mills under construction in state.

The newly installed 40 lakh spindles mills mainly produce average yarn count of 30s and their productivity is very high due to this coarser count and high speed new machines.