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2025-02-24 10:55:22 am | Source: Kedia Advisory
Indian Cotton Market Faces Pressure Amid High Supply, Weak Demand by Amit Gupta, Kedia Advisory
Indian Cotton Market Faces Pressure Amid High Supply, Weak Demand  by Amit Gupta, Kedia Advisory

The Indian cotton spot market is under downward pressure due to high supply and limited mill buying. The Cotton Association of India (CAI) has lowered its cotton production estimate to 301.25 lakh bales, a 7.84% decline from last season. Despite weak domestic yarn demand, a weaker rupee has boosted export orders. Cotton arrivals have dipped below 2 lakh bales due to festivals, but the Cotton Corporation of India (CCI) remains an aggressive buyer, procuring 8.6 million bales so far. CCI aims to stabilize the market by assuring farmers against distress sales. Prices in Rajkot are expected to trade between Rs.25,600 and Rs.24,800 per bale with a mild bearish trend.

Key Highlights

* Indian cotton prices remain under pressure due to high supply.

* CAI cuts cotton production estimate to 301.25 lakh bales.

* Weak domestic yarn demand persists, but export orders rise.

* CCI has procured 8.6 million bales, supporting market stability.

* Cotton prices in Rajkot expected to trade with a mild bearish trend.

The Indian cotton market is experiencing sluggish price trends due to an oversupply and weak mill demand. Mills remain well-stocked and are not making fresh purchases, keeping prices under pressure. In Rajkot, cotton prices are projected to range between Rs.25,600 and Rs.24,800 per bale with a sideways to mild bearish trend.

The Cotton Association of India (CAI) has revised its cotton production estimate downward by 2.5 lakh bales, now pegged at 301.25 lakh bales, a 7.84% decline from the 2023-24 season. Additionally, CAI has lowered its total supply estimate for the season by 1.5 lakh bales. Domestic consumption remains steady at 315 lakh bales, while exports are expected to drop significantly to 17 lakh bales from last season’s 28.36 lakh bales.

Cotton yarn demand in South India remains weak, but a weaker rupee has fueled export orders, allowing mills to operate at full capacity. However, sluggish domestic payments continue to slow mill buying. Meanwhile, all-India cotton arrivals have fallen below 2 lakh bales, likely due to festival-related disruptions in major cotton-growing states.

Despite this, the Cotton Corporation of India (CCI) has remained an aggressive buyer, purchasing 8.6 million bales so far. CCI has reassured farmers that it will procure all cotton brought to its designated yards, discouraging distress sales. The agency plans to procure 10 million bales this season, up significantly from last year’s 3.28 million bales.

Finally

With high supply and limited mill buying, the cotton market is likely to remain under pressure. CCI’s procurement efforts are helping stabilize prices, but a mild bearish trend persists.

 

 

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