Indian cotton prices have firmed up over the past week, driven by a bullish trend in global markets and domestic concerns over a decline in acreage due to deficient rainfall, according to industry sources. The Cotton Corporation of India (CCI) raised its prices by ₹800 per candy (356 kg) over the past two days, even as demand from both spinning mills and the trade remained firm, reported The Hindu Business Line.
Price Movement and Acreage Decline
The cotton acreage in India dropped by 15% year-on-year as of July 10, to 79.54 lakh hectares from 93.95 lakh hectares, according to the latest Agriculture Ministry data. This supply-side concern coincided with a rally in global cotton futures. Ramanuj Das Boob, a sourcing agent in Raichur, noted that "New York prices have also firmed up with futures on ICE moving from around 75-76 cents per pound to around 81-82 cents." He added that uncertainty over the coming crop due to the delayed monsoon is moving the market.
| Metric | Current | Previous Year | Change |
|---|---|---|---|
| Cotton acreage (as of July 10) | 79.54 lakh hectares | 93.95 lakh hectares | -15% |
| ICE cotton futures (cents/lb) | 81-82 | 75-76 | +8% |
| CCI price increase | ₹800 per candy | — | — |
Supply Dynamics
CCI witnessed robust sales, selling over 1.2 lakh bales on Monday and 1.5 lakh bales on Tuesday, according to Das Boob. Multinational companies are also off-loading their stocks, pricing them about ₹1,000 per candy higher than CCI levels. Das Boob warned that cotton already germinated needs rains: "There are no rains in parts of Karnataka and Telangana, where cotton has already been sown. If it doesn't rain now, it may become difficult."
However, Atul Ganatra, chairman of the Crop Committee of the Cotton Association of India (CAI), expressed a bullish outlook despite the deficit rain. "El Nino will not impact cotton crop. Actually, it will help in increasing the cotton sowing area. Less rains would been better yield and quality and quantity," he said. Ganatra reported that cotton sowing is complete in about 80 lakh hectares against 86 lakh hectares last year, and by July 25 it will cross 100 lakh hectares as almost all growing areas have received good spells of rain. He forecast total cotton sowing at 125-130 lakh hectares, 10-15% more than last year, due to late rains pushing farmers to choose cotton.
Demand and Inventory
Big mills are covering cotton at ₹64,000 levels, though they hold 3-4 months of stocks, Ganatra said. "As they have bought at cheaper rates, they are buying at the current prices to average." He added that all major Indian mills have cotton stock up to November, and some mills up to December 31.
Anand Popat, a broker in Rajkot, noted in his weekly newsletter that overall cotton availability remains comfortable in India. However, premium quality cotton is relatively limited, with a significant share held by CCI and multinational trading companies. "This could keep the cotton prices well supported during the remaining months of the season," Popat said. Daily kapas arrivals have declined to around 7,000-8,000 bales. Demand from spinning mills remains steady, while domestic and export yarn demand has shown gradual improvement.
Outlook for Traders
For commodity traders and procurement teams, the current environment suggests continued price support. The acreage decline and global price strength provide a floor, while comfortable overall availability and large mill inventories may cap upside. Key factors to watch include monsoon progress in Karnataka and Telangana, CCI's pricing strategy, and weekly export yarn demand data. The divergent views between field-level concerns (Das Boob) and official optimism (Ganatra) underscore the uncertainty around the final crop size and quality.
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