India’s cotton market continues to grapple with significant supply-side challenges despite a 0.04 per cent rise in cotton candy prices in South India. This rise in cotton candy prices in South India is being driven by a rise in apparel orders and exports.
India’s cotton production is also expected to decline by 7.4 per cent to 30.2 million bales in 2024-25 due to reduced planting areas and crop damage caused by heavy rainfall. USDA has alson revised its production estimate for India to 30.72 million bales. This decline in production estimates is anticipated to impact exports while boosting imports, which are projected to rise to 2.5 million bales during the year.
India’s production challenges are expected to cause global cotton prices to rise even as supported by higher yields in China, Brazil, and Argentina, worldwide output is predicted to increase by 200,000 bales. Nonetheless, the market is facing some downward pressure from Hurricane Helene’s disruption of U.S. production and a global dip in import demand.
In India, with a 9 per cent Y-o-Y shrinkage in cotton acreage, particularly in Gujarat, farmers are shifting to more profitable crops like groundnuts. However, despite this shortage in supply, domestic cotton demand in India is projected to remain steady at 31.3 million bales in 2024–2025.
The rising prices and tighter supply chain have sparked mixed reactions in the market. Apparel manufacturers are voicing concerns about potential cost escalations, while exporters are keeping a close eye on global price trends.
Stakeholders are urging the government to introduce new policies to support farmers in addressing crop damage and exploring more sustainable planting practices to stabilise cotton production.
