Cotton prices in India are likely to remain subdued over the third quarter of the current fiscal.

There has been an increase in cotton production by almost 12 per cent in the current 2022-2023 domestic season. The higher production of cotton is supported by a higher area under cultivation. Fresh arrivals of cotton have started in Gujarat and other cotton growing states. But with domestic as well as global consumption likely to be lower than in the previous season, a supply surplus is expected which is likely weigh down upon prices.

Though the spread between Indian cotton and international cotton prices has reduced considerably, Indian cotton has continued to be more expensive than international cotton. Spinning mills across India are expecting and waiting for a further fall in cotton prices.

In order to compete in the international cotton yarn market, local mills need to source rawmaterial at prevailing international prices as out of India’s total production of cotton yarn, 40 per cent is being exported. Higher cotton production could cool domestic prices and allow spinners to regain some export competitiveness but international cotton prices could fall on slowing yarn demand from Pakistan and Vietnam amid stable global production.

Cotton prices would be determined upon holding capacity of farmers and export as well as domestic textile industry demand in coming days.