MUMBAI, 11 Jan (Commoditiescontrol): India’s cotton production for the marketing year (MY) 2024/25 is forecast at 25 million 480-lb bales (approximately 32.05 million 170-kg bales), as per the USDA’s Foreign Agricultural Service (FAS) Mumbai. However, India’s official government estimate is lower at 23.4 million 480-lb bales (approximately 30 million 170-kg bales), the weakest production level since MY 2008/09. This significant decline underscores the challenges faced by India’s cotton sector, including reduced acreage, pest infestations, and a shift to competing crops.
The divergence between USDA and Indian government estimates stems from differing assumptions regarding planted areas and yield. The USDA projects 11.8 million hectares of cotton cultivation with an estimated yield of 461 kg per hectare, while the government cites a smaller acreage of 11.4 million hectares with yields forecast at 448 kg per hectare. Notably, the government’s estimate excludes cotton sown during the winter season in southern India, which partially explains the variance.
Factors Driving the Decline
Farmers in key cotton-producing states have shifted to alternative crops due to low cotton prices over the last two years and recurring pest issues. Persistent pink bollworm infestations in Maharashtra and Gujarat, coupled with unfavorable price realizations, have deterred cotton cultivation. While favorable monsoon conditions may improve yields in central and southern regions, these gains are unlikely to fully offset the overall production decline.
Rising Import Dependency
India’s textile mills are increasingly relying on imported cotton to meet their raw material requirements, given the domestic shortfall. Imports for MY 2024/25 are forecast at 2 million 480-lb bales (approximately 2.56 million 170-kg bales), representing a staggering 324% year-on-year increase between August and November. Preliminary data for November shows a 900% jump in import volumes compared to the same period last year. Major suppliers include Australia, Mali, Brazil, and the United States.
This surge in imports is driven by competitive global prices and a preference for high-quality long-staple cotton varieties, particularly from the U.S. and Australia. Mills are leveraging the weakened rupee to enhance competitiveness in exports of value-added textiles.
Export Constraints Amid Tight Domestic Supplies
Raw cotton exports are expected to remain limited, with MY 2024/25 exports forecast at 1.2 million 480-lb bales (approximately 1.54 million 170-kg bales). November data highlights a 109% month-on-month rise in shipments but reflects a 26% year-on-year decline in cumulative exports through November. Bangladesh continues to dominate as India’s primary export market, accounting for 91% of shipments, followed by Vietnam and Indonesia.
Domestic Market Trends
Cumulative cotton arrivals at market yards reached 10 million 480-lb bales (approximately 12.8 million 170-kg bales) by December 31, 22% higher than the previous year. Despite the higher arrivals, farmgate prices remain below the Minimum Support Price (MSP), prompting the Cotton Corporation of India (CCI) to intervene. The CCI has procured 4.4 million 480-lb bales (approximately 5.64 million 170-kg bales) under MSP operations to support farmers. Additionally, the CCI is managing unsold inventories of 488,000 480-lb bales (approximately 625,000 170-kg bales) from the previous season.
Textile mills, wary of price volatility, are maintaining lean inventories sufficient for 30-45 days of operations. Domestic lint prices have declined by 10% since October, prompting mills to secure immediate raw material requirements.
Consumption and Export Demand
Mill consumption is forecast at 25.5 million 480-lb bales (approximately 32.6 million 170-kg bales), buoyed by strong demand for value-added textile products. Cotton yarn exports, while 20% lower than last year, are 5% above the five-year average, with Bangladesh as the leading market. Preliminary data for November indicates a 2% rise in cotton yarn shipments and a 9% increase in readymade garment exports compared to the previous year. The festive season in late 2025 is expected to drive further demand for textiles.
Outlook
India’s cotton market is navigating through a challenging year marked by the lowest production in 15 years and an increasing dependence on imports. While robust domestic demand and resilient mill consumption offer some stability, constrained exportable supplies and price volatility remain concerns. Global price trends, currency movements, and government interventions will play critical roles in shaping the cotton sector’s trajectory in the coming months.
For industry stakeholders, the focus remains on efficient procurement strategies and monitoring domestic and global price movements to mitigate the impact of this supply-demand imbalance.
(By Commoditiescontrol Bureau; +91 98201 30172)
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