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India’s cotton prices under pressure

Cotton prices in India have come under pressure since the second half of March 2017. The arrivals of cotton picked up pace during in March 2017. Arrivals during March 2017 were higher than arrivals during the corresponding month last year.

The rally in cotton prices since the start of the current calendar year halted at around Rs 21,740 per bale in the third week of March. After consolidating at this level for some time, prices have started to decline since March. Weak demand from cattle feed traders, coupled with an increase in the supply, pushed the price lower.

The other factors which will impact cotton prices in coming months are monsoon forecast in the sub-continent and the weather during the US planting season. A 21 per cent jump in US cotton acreage is projected. World cotton production is forecast to grow by one per cent in 2017-18 as high prices in 2016-17 encourage farmers to plant cotton.

India’s production is projected to grow by two per cent. Production in India is pegged at 345 lakh bales. Available stocks for the current season are above 500 lakh bales after adding carryover stocks and imports. Domestic use and exports during the current cotton season will be about 355 lakh bales.