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Steadier Tone

August 12, 1967 THE distress selling in groundnut and groundnut oil on July 28 did mark the end of the declining trend which had been in progress for quite some time and had brought down the spot quotation for groundnut oil from around Rs 45 to Rs 30 per 10 kg within just two months. The market displayed a distinctly steadier tendency last week. Prices, which had already staged a brisk recovery from their panicky low in the previous week itself, hardened further. Groundnut Bombay bold which had been sold down to Rs 140 a quintal on July 28 was marked up to Rs 176 last week. Groundnut oil improved to Rs 37.50, but later it receded to around Rs 36. Castor futures held firm between Rs 137 and Rs 138 and castor oil (Commercial) was steadier around Rs 27.75.

Groundnut Oil Slumps

 early maturing Baramati crop will start moving into the market shortly. Marketwise, there is very little to report this week. The turnover remains extremely restricted and the general tendency has been distinct- ly subdued because of the very favourable weather conditions all over the country. Sentiment has also been affected by the release of a quota letter for 2.25 lakh bales of US cotton out of the 4 lakh bales, for which purchase authorisation had been announced by Washington on July L Out of these 2.25 lakh bales, as much as 1.25 lakh bales will be of stapling one inch and below and one lakh bales of one inch. The bulk of this cotton is likely to be supplied from the stocks of the Commodity Credit Corporation. As this cotton is expected to arrive in India in October-November it will go a long way to meet the industry's requirements of short staple cotton during the lean period of indigenous supplies.

Curb on Advances

 AFTER struggling hard for little over a month to put up a steady show, Dalai Street last week gave in under the strain of political and economic tensions which have been growing with time. Equities have declined further under bear pressure and considerable nervous bull liquidation, and the market has sunk to an altogether new low for the year. Apart from disturbing signs of recession in quite a few important industries, confidence has been further undermined by the prospect of a freeze on prices, wages, profits and dividends which was discussed at the recent meeting in New Delhi of the State Chief Ministers. Morarji Desai is reported to have expressed his readiness to examine the feasibility of such a freeze. And the stock market simply dreads profit and dividend freeze for the very obvious reason that corporate profits and dividends are the two major factors influencing the outlook for equities.

Mixed Pattern

 because of unremunerative prices. The very fact that cotton policy has seldom been announced before the commencement of sowing operations is a clear indication that the authorities do not believe that prices have much to do with production. It is all too obvious that production depends on the weather and proper and timely inputs. It is high time that all the interests concerned, including the Government, engage themselves in making available to farmers all the facilities which will help improve the per acre yield. Cot ton decontrol by itself will certainly restore freedom of activity to traders and mills, but it is unlikely to contribute to increased production of cotton which is the real need of the time. The prosperity of the cot- ton textile industry is closely linked with the abundant supply of raw material at reasonable prices, since cotton accounts for half the total cost of cloth.

Disturbing Move

worth reporting about cotton. The turnover is extremely restricted, this being the fag-end of the season. Prices continue to be quoted susbtantially above the statutory ceilings, with unofficial premiums ranging between Rs 150 and Rs 450 per candy, depending on the quality of cotton. The more well-to-do mills never really care to think that self-restraint and discipline in the purchase of raw materials could considerably help the cause of the marginal and uneconomic units which the industry continues to champion with great zeal. And the Government seems not the least bothered that the control order is being openly violated. A complete mess, really! The current season has only two months more to go. Since increased mill consumption and larger exports during the season are likely to be more or less offset by larger imports, the carry-over at the end of August is unlikely to be smaller compared to the carry-over stocks at the beginning of the season. In any case, the difference will be marginal. But since the stocks will consist of larger quantities of foreign cotton than Indian cotton, it could create considerable hardship for mills which depend almost entirely on indigenous cotton.

Prices Recede

Cotton Yields Must Be Raised THE ONSET of the monsoon has not had even the slightest impact on the cotton market where prices continue to hold remarkably firm around their all-time high levels. This is scarcely surprising with all attention being focussed on the prevailing acute shortage. The industry is, in fact, talking about en bloc closure of mills for a month or sc in September/October as there might not be enough cotton left at the end of the current season to carry the mills through till the new season's crop moves into the market and becomes available for consumption. The Commerce Minister is reported to have held out the assurance that the Government would try to arrange larger imports of cotton on an emergency' basis in order to help the industry tide over the difficult situation. Already, as things stand, imports during the current season will be much larger than during 1965-66. By the end of May imports were 5.7 lakh bales, whereas the total quantity imported during 1965- 66 was only 4.87 lakh bales. In any case, it is very clear that, if the carry-over on August 31 happens to be smaller than at the beginning of the season, it will be because of larger mill consumption during 1966- 67, the compulsory holiday (once a week from December 12 to April 9 and once a fortnight thereafter) notwithstanding. The larger consumption is attributable to expansion of spindleage capacity.
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