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India's cotton production for the 2024/25 marketing year is projected at 25 million 480-pound bales, showing stability from earlier forecasts but marking the lowest levels in five years. Increased yields due to favorable soil and water conditions partially offset a decline in cultivation area. Slow domestic demand, lower international prices, and subdued export prospects weigh on market dynamics. However, the government's procurement efforts under the Minimum Support Price (MSP) program offer some relief to farmers. Additionally, increased imports driven by price competitiveness and quality preference reflect evolving trade trends. Despite challenges, the textile industry demonstrates resilience through growing exports of cotton-based value-added products.

Key Highlights

* Cotton production forecast for 2024/25 remains steady at 25 million bales.

* Lowest cultivation area in five years reported at 11.8 million hectares.

* MSP procurement initiated to support farmers amid weak domestic prices.

* Imports rise due to quality and price advantages over domestic varieties.

* Textile exports show growth despite challenges in the domestic market.

India’s cotton production for the 2024/25 marketing year remains unchanged at 25 million 480-pound bales, the lowest in five years. This is attributed to a reduced cultivation area of 11.8 million hectares, despite improved yields of 461 kilograms per hectare, marking the highest in four years. Domestic ex-gin prices dropped by 9% to 82 cents over the past month, further challenged by a 4% decline in the Cotlook-A Index.

The government has stepped in to stabilize market prices through MSP procurement, with initial purchases reported at 176,000 bales. Importantly, global price competitiveness has spurred a surge in cotton imports, particularly from Australia and the U.S., with shipments in October up 479% in value year-on-year. Meanwhile, weak domestic demand continues to exert pressure on farmgate prices, leading to phased market arrivals by farmers.

India’s textile sector shows resilience as cotton-based yarn and garment exports rise by 7% and 35%, respectively, despite domestic challenges. However, declining apparel production, coupled with higher input costs, limits domestic mill consumption, which is forecasted at 25.5 million bales. Additionally, the upcoming Bharat Tex event in February 2025 is expected to highlight the sector's potential amid ongoing market adjustments.

Finally

India’s cotton sector faces a challenging year with reduced production and subdued domestic prices. MSP interventions and export opportunities may provide crucial support.

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