With cotton prices rising to Rs 50,000 per candy in the end of the 2015-16 cotton season, many spinning mills in Tami Nadu have cut down on yarn production. The primary reason being cotton yarn prices have not increased in tandem with the hike in raw cotton prices, making managing operations unviable for these spinners.
These spinners expect yarn prices to grow following the reduction in yarn production, which will lead to a shortage of cotton yarn. Nearly 60 per cent of mills have cut production, either by giving additional days off or reducing the shifts. Additionally, since the new cotton crop is expected to arrive only in November, the mills do not want to exhaust their existing cotton stocks, before the new raw cotton arrivals begin.