Monthly Prices Movement

  • Cotton prices overall remained strong during the month of August in the various markets across the country due to low production estimates and tight supplies. However, prices saw some correction at higher level as buyers turned cautious.

  • The fall started after reaching a record high in July 2016. Prices on MCX corrected about 10.7 % after touching a high of Rs.23,650 per bale (of 170 kg each) on reports of improved acreage due to adequate rains in Gujarat and Maharashtra.

  • Cues from overseas market is not encouraging either as Cotton prices in US market dropped to below 1-month low as concern over weather faded and raised prospects of better crop.

Ground Report

  • India being the largest producer of Cotton in the world has to now depend on the importing Cotton of around 1.8 million bales from US, Australia and even Pakistan in order to meet demand for the coming months.

  • Cotton Yarn imports in Jan-July amounted to 1.13 million tonnes, down 19.51% on annual basis. In July, it totaled 0.16 million tonnes, down 24.1%. Imports during the period from September to July of 2015/16 Cotton crop year totaled 1.86 million tonnes, down by 11.92% on the year.

  • Textile Ministry stated that India Cotton consumption in June declined marginally at 2.51 million bales (170 kg each) from 2.53 in May, but down from 2.56 million bales from a year ago.

  • Cotton production in India expected to hit a seven-year low in 2016-17 because of a reduction in the area under cultivation and pest attacks in top producer state Gujarat, even as domestic prices have started firming up after a poor season.

  • India's Cotton output to be similar to previous year despite fall in acreage, thanks to good Monsoon. CAI pegged output for the season (Oct-Sept) likely at 33.6 million bales (170 kg each).

  • CAI projected Cotton exports in 2015-16 (Oct-Sept) at 6.5 million bales, while country has shipped around 6 million bales until July. Imports could be around 1.5 million bales.

  • Rising prices of domestic Cotton have also impacted the exports mainly to China and Pakistan. Both countries looking out to import from other countries such as US as the prices are more lucrative in comparison.

  • India has so far exported about 2.5 million bales to Pakistan only out of the total exports of 6.8 million bales. There was a good demand from Pakistan this year but after prices gone up, this has affected the export from India.

  • Area under Cotton has dropped so far as it facing stiff competition with Pulses in many states as it seems to be very lucrative with good remuneration by government. Cotton planting in India likely to fall to the lowest in seven years in the 2016-17 marketing season.

  • According to the agriculture ministry, India’s Cotton acreage is at 10.278 million hectares which is lower than the last year acreage of 11.268 million hectares as of 26 August 2016.

  • Acreage under Cotton during the ensuing 2016-17 crop year expected to be lower by about 10% than that of the current year. However, productivity is likely to be higher due to the better weather conditions across all cotton growing regions of the country.

  • Central Institute of Cotton Research (CICR) stated that Cotton planting for this season is unlikely to exceed 10.4-10.5 million hectares.

  • Cotton crop is in excellent condition in Indian state of Gujarat as the weather continued to remain favorable with light rain showers reported end of the August whereas Maharashtra may witness a decline in sowing acreage of around 10-15% due to delayed sowing and arrival of late monsoon season.

  • Maharashtra accounts for almost 25 to 30% of the Cotton grown in the country. Farmers were forced to turn to alternatives such as Soybean because the sowing process was delayed.

  • There is possibility of new Cotton crop to get delayed in the spot markets in next season, which begins from October 1, 2016 due to heavy rainfall in many parts.

  • Central Institute of Cotton Research (CICR) is testing out 15 varieties of domestically produced desi Cotton seeds in order to replace the imported genetically modified Monsanto BT Cotton seeds which was prone to various pest attacks such as white-fly, pink boll worm, etc.


  • India Cotton output may fall over 13% in 2015-16, as per fourth advance estimates released by government.

  • All Gujarat Cotton Ginners Association forecast India's Cotton output at 34 million bales even though the sowing acreage was 7-8% lower compared to last year.

  • India is selling its existing stock, purchased under the minimum support price to MSME spinning mills through the Cotton Corporation of India (CCI) e-auction.

  • The National Development and Reform Commission of China is likely to extend the state reserved Cotton auction to September 30, 2016, which was originally supposed to end on August 31, 2016.


  • ICAC stated that world Cotton demand declined by 1% in 2015-16 while world production decreased by 18%. Declines in production occurred in the top five producers, which account for 76% of world output. India saw its production fall by 11% whereas US output decreased by 21%.

  • USDA revised India's 2016-17 Cotton area down by 6% at 11.2 million hectares. USDA forecast India's Cotton output up by 2% whereas 4.5% lower for China.

  • USDA pegged 2016-17 world Cotton output at 101.6 million bales, an increase of 4.7 million bales above the 2015-16 season on higher output expectations from US, India, Brazil and Pakistan.

  • China Cotton association may exceed its selling target of 2 million tons and may offload more than 2 million tons of Cotton from its huge reserve.

  • China’s Cotton import dropped by 10.2% year on year at 94,800 tonnes in July, as per China Cotton Association. Cotton imports fell by around 50% at 525,000 tonnes in the first seven months of this year.

  • China Cotton Association forecast total Cotton output in China for year 2016-17 likely to fell by 4.4% Y/Y to 4.61 million tonnes which may add bullishness to Cotton market.

  • Pakistan Bureau of Statistics (PBS) stated that the country imported 15,079 tonnes of raw Cotton in July, which is lower by 33.59% as compared to previous year.

  • Pakistan likely to face a shortage of around 2.5 million Cotton bales during current year as the sowing this year remained 25% lower than the last year.

  • Cotton Outlook (Cotlook) increased global Cotton production forecast in 2016-17 to 21.97 million tonnes, up 65,000 tonnes from previous forecast. Cotlook pegged India's Cotton production in 2016-17 at 5.908 million tonnes, down from earlier forecast of 6.035 million tonnes.


  • There are slack activity in the market as sellers and buyers not willing to deal in at rates different from their desired level. Whereas, the mills and spinners are waiting for the arrival of new stocks which bring the domestic Cotton to a much more competitive rate. Major buyers are sideline and now eying on development of new Cotton crop progress, which is growing well under favorable weather conditions.

  • Cotton prices may fluctuate until arrivals of new crop in September-October. However arrivals of new crop in many states are likely to delay due to delayed monsoon arrival. Domestic Cotton balance sheet is already tight and in case of any more delay in new crop arrival the market will become unstoppable and may rise once again to season high.

  • Cotton outlook will continue to remain range-bound with bearish mode with no major movement in price expected until the arrivals of new crop in the month of September and the domestic price needs to fall in order to stay competitive in the global market.

  • India Cotton at present is uncompetitive in the global market and in-case it remain so than exports prospects from the country in the new season 2016-17 (Oct-Sept) likely drop even more. Further, higher prices would also hurt domestic mills and spinners.

  • Cotton prices may decline around new crop supply and expected firm tone to prevail until then. Prices may trade between Rs 46,000-47,000/candy (356 kg each) up to October and thereafter prices may decline to Rs 40,000/candy on new crop supply pressure.

  • Indian Cotton are very much uncompetitive in the global market and in order to get good export orders from overseas market, it should fall below the Cotlook Index. Usually Indian Cotton remains discount to China and Cotlook Index, but tight availability pushed prices in premium after April month.