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India Cotton Association Says Cotton Disputes Will Hit A New High This Year.

2011/9/24 11:20:00 32

India Cotton Association Has A New Record In Cotton Disputes This Year.

Because of the unexpected fluctuations in cotton prices, resulting in extensive contract defaults between cotton ginning mills, textile mills and cotton traders, cotton disputes in India will record this year.

Breach of contract is global, all international this year.

cotton

10% of the trade contracts were contract disputes, 5 times higher than the normal year.


The India Cotton Association has received an arbitration request from a large multinational trading company, exporter and textile mill to the ginning factory, and the cotton mill signed the contract. However, when the price went up, it did not deliver cotton.

It is reported that the total number of cases exceeds 400, worth hundreds of millions of rupees.


DhirenSheth, chairman of India Cotton Association, said: "although I can not give the exact figures, this year's arbitration cases have been piled up, involving huge sums.

Large fluctuations in price lead to a breach of contract. "


Vigilant India textile mills and cotton exporters now decide to stop signing forward contracts with ginning agents because they purchase cotton according to their daily spot prices.


"No one is willing to trust the ginning plant because if

Price

Against them, they will not execute the contract.

They buy cotton according to the spot price.

There is plenty of cotton in the market, so there will be no problem, "said cotton merchant Mehta.


Cotton prices rose rapidly in -12 last October, and then plummeted in March this year, causing contract disputes.

The CotlookA index of concern has fluctuated between 83 cents / pound and 2.44 cents / pound.


Forward sales will lock the buyer and the buyer in a pre fixed one.

Price

When prices rise, they protect textile mills and cotton traders, but the ginning mills lose potential benefits and therefore default.

When the price falls, the ginning factory wants to deliver the goods, but the textile factory refuses to issue a letter of credit at a higher price.


The ginning department is unorganized, and the ginning factory does not understand the sanctity of the contract.

Each ginning factory saved 10 million rupees due to default.

However, some of the advanced cotton merchants have a history of over 100 years, and they have to protect their reputation in overseas markets.

Failing to receive cotton in time, they are very embarrassed to face foreign customers.

All multinationals and big cotton businesses have been greatly affected. "

Sheth says.

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