Cotton Prices Rise as Lower Acreage and Global Market Strength Support Domestic Rates

Reduced sowing area, higher international cotton prices and firm mill demand keep domestic cotton market supported despite rainfall concerns.

Cotton prices have strengthened in the domestic market, tracking gains in global prices amid concerns over lower acreage caused by deficient rainfall. Industry participants said demand from mills and traders remains firm, while crop progress continues to depend on rainfall across key producing regions.

Cotton prices have strengthened, following the rally in global markets and concerns over lower acreage in India due to deficient rainfall. According to Agriculture Ministry data, acreage stood at 79.54 lakh hectares (lh) as of July 10, compared with 93.95 lh during the corresponding period last year, a decline of 15 per cent.

The Cotton Corporation of India (CCI) increased its selling price by ₹800 per candy (356 kg) over the past two days as demand from mills and traders continued to remain firm.

Ramanuj Das Boob, a sourcing agent in Raichur, said:

“The market is tight and New York prices have also firmed up, with the ICE futures rising from around 75-76 cents per pound to 81-82 cents,”

He added:

“Uncertainty over the coming crop due to the delayed monsoon is supporting the market,”

According to him, the CCI sold over 1.2 lakh bales on Monday and 1.5 lakh bales on Tuesday. He also said multinational trading firms were offloading stocks at prices around ₹1,000 per candy higher than the CCI's rates.

Rainfall Remains Key for Crop Progress

Das Boob said the cotton crop that has already germinated now urgently requires rainfall.

“There is no rain in parts of Karnataka and Telangana, where cotton has already been sown. If it doesn’t rain now, it may become difficult,” he said.

However, Atul Ganatra, Chairman of the Crop Committee of the Cotton Association of India (CAI), remained optimistic despite the rainfall deficit.

“El Nino will not impact the cotton crop. Actually, it will help in increasing the cotton sowing area. Less rain would mean better yield, quality and quantity,” he said.

According to Ganatra, cotton sowing had reached around 80 lh, compared with 86 lh during the same period last year.

“By July 25, sowing will cross 100 lh as almost all growing regions have received good spells of rain. With the current pause in rainfall, farmers are speeding up cotton sowing,” he said.

He added that acreage in South India is 20 per cent higher than last year.

“Due to the late rain, farmers now have the only option of sowing cotton. Total cotton sowing will be 125-130 lh, about 10-15 per cent higher than last year,” Ganatra said.

Mill Buying and Supply Situation

Ganatra said large spinning mills were purchasing cotton at around ₹64,000 per candy, despite already holding stocks sufficient for three to four months.

“As they have bought at cheaper rates, they are buying at the current prices to average,” he said, adding that most large mills had stocks until November, while some were covered until the end of December.

Anand Popat, a cotton broker based in Rajkot, said overall cotton availability in India remained comfortable. However, he noted that premium quality cotton remained relatively scarce because much of the stock was held by the CCI and multinational trading firms.

“This could keep 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.