Pressure on Indian Cotton Market Due to Higher Supply and Weak Demand

The Indian cotton spot market is under pressure due to higher supply and limited mill purchases. The Cotton Association of India (CAI) has revised its cotton production estimate down to 301.25 lakh bales, which is 7.84% lower than the previous season. Despite weak domestic yarn demand, the depreciation of the rupee has boosted export orders. Cotton arrivals have decreased to below 2 lakh bales due to festivals, but the Cotton Corporation of India (CCI) remains an aggressive buyer, having already procured 8.6 million bales. CCI's goal is to stabilize the market by assuring farmers that it will buy all cotton brought to its designated yards, thus discouraging distress sales. Cotton prices in Rajkot are expected to experience a slight decline, trading between ₹25,600 and ₹24,800 per bale. The Indian cotton market is seeing sluggish price movement due to higher supply and weak mill demand. Mills have adequate stock and are not making new purchases, putting pressure on prices. In Rajkot, cotton prices are expected to trade between ₹25,600 and ₹24,800 per bale, with a slight downtrend. The Cotton Association of India (CAI) has reduced its cotton production estimate to 301.25 lakh bales, 7.84% lower than the 2023-24 season. Additionally, CAI has lowered its total supply estimate by 1.5 lakh bales for the season. Domestic consumption is expected to remain stable at 315 lakh bales, while exports are projected to decline to 17 lakh bales, down from 28.36 lakh bales in the previous season. In Southern India, the demand for cotton yarn remains weak, but the depreciation of the rupee has increased export orders, allowing mills to operate at full capacity. However, slow domestic payments are slowing down mill purchases. Due to festivals, cotton arrivals in key producing states have decreased to below 2 lakh bales. Despite this, the Cotton Corporation of India (CCI) has aggressively bought 8.6 million bales, ensuring that it will purchase all cotton brought to its designated yards, discouraging distress sales. CCI has set a target of procuring 10 million bales this season, significantly higher than the 3.28 million bales procured last year.

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