Circular dated 21st July 2020 to the CAI Members

(1)

With a view to serve all stakeholders, the CAI publishes daily spot rates of all major growths of Indian cotton.

(2)

The descriptions of Indian cotton for which daily spot rates are published are provided in the Schedule for Standard Descriptions of Indian Cotton maintained by the CAI in accordance with its By-laws.

(3)

In order to make this Schedule contextual and relevant to the quality parameters and business practices prevailing in the market, this Schedule is reviewed and amended by the Board of Directors from time to time as per the suggestions of the Daily Rates Committee and other committees of the Association and changes made therein are notified for information of the members. The last such amendment was made in this Schedule on 17^th July 2020.

(4)

Apart from making changes in the quality parameters of certain cotton growths, moisture, RD and gravimetric trash were added in the Schedule as and by way of additional quality parameters.

(5)

CAI has well established and time tested mechanism of Daily Spot Rates Committees comprising of 4 weekly panels chosen from our members well-versed with the spot markets. These four weekly panels comprise of a Chairman and other members, which meet daily and after considering the prices prevailing in the markets including those of the Government agencies, arrive at spot rates of various growths. There are well-defined guidelines and working of these panels are coordinated under the guidance of the Coordination Committee Chairman appointed by the Board of Directors of the CAI. The entire process is broad based and about 30 members having adequate experience are involved in the process of arriving at spot rates at the CAI.

(6)

While arriving at the Spot rates, the members of these weekly panels take into consideration all the transactions which have taken place on that day by the ginners, traders, MNCs, CCI, Marketing Federations, spinners, exporters, etc.

(7)

The spot rates fixed by the CAI are well recognised by the Government agencies and are used by them for their policies and reports, banks to finance stocks, insurance companies to settle claims, associations for their arbitrations and press and media as their source of information.

(8)

Variations which were observed between the prices prevailing in the market and the spot rates of various growths of Indian cotton published by the CAI in some months were due to the inferior quality of cotton which arrived in the market as set out below: -

(i)

Grade of cotton arriving in the market was observed to be of lower RD than the base grade ’Fine’, which in respect of bulk of the cotton of the staple length range of 28 mm to 32 mm consists of 75/76 RD (equal to middling 31).

(ii)

Higher level of moisture % (upto 11%) was observed against 9% moisture provided in the Schedule.

(iii)

Against the ‘Fine’ grade of bulk of the cotton of the staple length range of 28 mm to 32 mm, which consists of 31/3 colour grade, cotton arriving in the market was observed to be of the grade of 31/4, 31/5 and 41/4.