Mills are reporting unbeleivable losses, due to high cotton prices. Many mills have shut their operations. But Cotton prices are already down a lot from the peak, however still above multiyear average. I saw an interview on CNBC wherein the official said that from mid october things should become fine. However benefit of low prices will only be available after 2-3 quarters as most of the companies and mills keep inventory of 11 months, however this time at such high prices mills and textile companies have not added to their inventory, and currently the inventories are reduced to around 7 months. Almost all textile companies are waiting for low prices in cotton to buy inventory.
Also do you have any idea, that how much of the cotton that they use are produced by themselves in their farm. I still wonder that if they were fully integrated then why, cotton prices affected them so badly. If you can help me understand?
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