The price of cotton per candy has increased by 0.04 per cent due to the increased demand for cotton yarn in South India, which was bolstered by a spike in orders from the apparel industry and robust export activity. Nonetheless, there are substantial supply-side obstacles facing the cotton market.
Reduced planted area and crop damage from high rainfall are expected to cause a 7.4 per cent decline in India’s cotton production for the 2024-2025 season, to 30.2 million bales. The USDA significantly tightened supply by reducing its India output prediction to 30.72 million bales. It is anticipated that this drop in domestic output would result in lower exports and a greater demand for imports, which are likely to climb from 1.75 million bales to 2.5 million bales last year.
Since worldwide production projections have been revised up by 200,000 bales, primarily due to stronger output in China, Brazil, and Argentina, reduced output in India could strengthen global cotton prices. Nonetheless, the market is seeing some downward pressure as a result of Hurricane Helene’s impact on US production and a decline in demand for imports worldwide.
Cotton acreage in India has decreased by 9 per cent annually, especially in Gujarat, where farmers have chosen to plant more lucrative crops like groundnuts. As a result, even with the supply deficit, India’s demand for cotton is predicted to stay constant at 31.3 million bales in 2024–2025.
