Cotton yarn prices have seen a slight uptick, settling at ₹53,610, influenced by shifting global cotton production forecasts. A reduction in Brazil’s projected output for the 2024-25 season, down to 3.79 million tonnes due to decreased planting in key regions, has contributed to the price rise. This adjustment comes despite an upward revision in India’s cotton crop projections. The Cotton Association of India (CAI) now estimates India’s output at 304.25 lakh bales, a 2 lakh bale increase attributed to strong performance in Telangana. The state’s production is now forecast to reach 42 lakh bales, a substantial 6 lakh bale jump.
Despite India’s increased production, raw material availability remains a concern. Kapas arrivals in key northern states like Punjab, Haryana, and Rajasthan have significantly decreased compared to the previous year, creating challenges for ginners and spinners. This regional supply constraint exists even as the latest World Agricultural Supply and Demand Estimates (WASDE) report anticipates a global production increase. The report projects a 1.2 million bale rise in global cotton output, reaching 117.4 million bales, largely driven by gains in India and Argentina. These contrasting factors create a complex market landscape.
Supporting the price floor are robust export orders and growing demand from South India’s garment sector. CAI data reveals cumulative cotton arrivals exceeding 156 lakh bales by January 22, representing over half of the estimated crop size. December-end stocks were calculated at 85.04 lakh bales. Domestic consumption projections have also been revised upwards by 2 lakh bales, reaching 315 lakh bales for the 2024-25 season.
Market analysis suggests short-covering activity, with open interest remaining stable even as prices rose. Support levels for cotton yarn are identified at around ₹52,030, with potential downside targets near ₹50,440. Resistance is observed at ₹54,490, and a break above this level could signal further price increases towards ₹55,360. The textile industry watches closely as these competing global and domestic forces shape the cotton market.
