Mills in the Indian state have cut yarn production by as much as 40 percent because business isn’t viable otherwise.
According to Business Standard, end-of-season prices were nearing 50,000 rupees per candy (about 96 cents per pound), and continuing normal production would have been futile as yarn prices weren’t matching the higher production costs, leading the mills to suffer sizeable losses.
The move to cut production is expected to give yarn prices a much-needed bump, and workers are seeing their shifts shortened or having to take days off to reduce production.
Because the new season’s crop is expected to arrive in November, mills also didn’t want to use up their available cotton stocks by converting them to yarn if it wouldn’t have paid off.
As of Sept. 20, the current Cotlook A Index of international cotton prices is 77.5 cents a pound, up from 67.3 cents a pound that time last year, but lower than the season high of almost 86 cents per pound, according to the International Cotton Advisory Committee (ICAC). In China, the price of cotton was just over 96 cents a pound last week.
Overall, ICAC noted however, “India’s mill use is expected to remain stable at 5.3 million tons due to strong domestic cotton prices and competition from competition from competing fibers.”