Ground Report

  • Cotton Corporation of India stated about 306.75 lakh bales of Cotton having arrived in market till 6th June, 90% of the total production of Cotton in current season.
  • Cotton planting has already been completed in Northern states of Punjab, Haryana and Rajasthan. Threat of pink boll-worm may result in lower Cotton sowing in major growing states like Gujarat, Andhra Pradesh and Karnataka this year.
  • Cotton acreage is likely to drop by 20% in season 2016-17 in Punjab and Haryana compared to the last season as the wary farmers opt for other Kharif crops after bearing heavy crop damage due to white-fly pest attack in the last season. The Cotton output dropped by 40-45% in the two states in season 2015-16 as the national output also estimated to dip by 12 per compared to last Kharif season.
  • Cotton planting in India likely to fall to the lowest in seven years in the 2016/2017 as farmers switch to other crops. CAI estimates India's 2016-17 (Oct-Sep) Cotton planting area to lower by 7% at around 11 million hectares, which will be the lowest level since 2009-10.
  • Sowing in Indian states of Maharashtra and Madhya Pradesh has already started after recent precipitation. Farmers from some belts of India are still waiting for Cotton sowing as rain is absent and insufficient moisture in soil for sowing.
  • Sudden spurt in Cotton prices this month added to the problems faced by textile mills, particularly in Southern Indian states of Telangana, Tamil Nadu and Andhra Pradesh.
  • Price of Shankar-6 variety increased from Rs 37,300 per candy of 356 kg at the beginning of this month to Rs 40,950 per candy on June 20, 2016, showing a rise of nearly 10 per cent.
  • Rising Cotton prices have slowed down exports. The problem is especially acute for those spinning mills that do not have enough raw material stock. To meet this situation, textile and spinning mill owners in Southern Indian states have decided to shut down operations twice a week.
  • Textile spinning mills in South India have started importing Cotton as prices are ruling higher in the local market compared to the international market. The cost of imported Cotton is lower by at least 2,000 per candy. High prices in the domestic market would push up Cotton imports in the current season (October-September).
  • India, the world's leading Cotton producer, contracted to import 20,000 bales from Pakistan for shipment this month after Indian prices jumped because of limited supply.
  • Indian Cotton prices have risen by 28% since the start of 2015/16 season on October 1. India's export competitiveness turned negative due to recent strong surge in Cotton prices. The export competitiveness of Indian Cotton likely to get stressed more going forward due to tight balance sheet and hence, exports are unlikely to pick up.
  • India so far imported about 1.2 million bales in 2015/16 and needs another 0.4 million bales before the new crop starts arriving from the end of September.
  • Cotlook downgraded its forecast for 2016-17 world Cotton production to 22.26 million tonnes. The decline in output by Cotlook attributable to an adjustment for India, where a modest decrease in sowing is now foreseen.


  • India hiked the Minimum Support Price (MSP), the rate at which the government buys the grain from farmers- of Cotton by Rs.60 to Rs 3860 per quintal for medium staple and Rs.4160 for long staple for the 2016-17 season.
  • Cotton sowing in Indian state of Haryana as on June 27 reported lower by 12% at 0.56 million hectares while Cotton sowing in Indian state of Gujarat is lower by 77% so far.
  • Import of raw Cotton was higher by 33% at 16535 tonnes this year until March as compared to 12426 tonnes last year. Month-on-month increase was 115.52 % as imports last month was 7672 tonnes. However, Cotton exports from India in October to April fell 12.5% from a year ago.
  • India's Cotton sowing as on June 24, 2016 dropped by 45% to 1.91 million hectares. Meanwhile, Cotton sowing in Maharashtra reported higher by 45%. Area planted for Cotton in Punjab is lower by 43.11% while it is lower by 14% in Haryana.
  • Cotton planting in Punjab and Haryana dropped 27% to 0.756 million hectares in the 2016-17 crop year as farmers shifted to other crops after incurring huge losses due to white-fly pest attack last year.


  • Government in Pakistan's Punjab province, the largest Cotton producing region in the country, has projected to plant cotton around an acreage of 5.7 million and set a target of producing 9.5 million bales of Cotton for this year. This year, Pakistan faced shortage of Cotton which it has to import from countries like India. Punjab province which produces 70 to 80 percent of Pakistan's cotton had suffered almost 45% crop damage last season due to pest attacks.
  • Aggressive buying in China Cotton auction is likely to strengthen the weaker export demand prospects of Cotton from India. China has sold about 34.28 lakh bales (1 Bales = 170kg) of Cotton in first month of auction started on 3rd May. Chinese millers may cut their yarn import in coming day which may put pressure on Indian Cotton prices.
  • World Cotton consumption fell by 3% to 23.6 million tonnes according to ICAC. Cotton consumption in India likely to rise by 4% to 5.4 million tonnes in 2016-17. World Cotton output dropped by 17% to 21.8 million tonnes in 2015-16 and forecast to increase by 6% to 23 million tonnes in 2016-17. India likely to remain world’s largest producer in 2016/17 and output in China expected to fall by 10% to 4.6 million tonnes.
  • USDA estimates world Cotton consumption to rise to 110.8 million bales.
  • Pakistan imported 35,868 tonnes of raw Cotton in May, advanced 92.27% as compared to 18,655 tonnes in May last year.
  • China's raw Cotton imports fell 52% from a year earlier to 78,235 tonnes.
  • Vietnam's Cotton imports reached 88,387 tonnes in May, declined 6.14% from the previous month.


  • Spike in price of Cotton in last six months will entice farmers to grow Cotton. The Cotton prices started picking in December after the Gujarat government announced bonus to boost the Cotton market suppressed by the surplus in the global market. Also, the record Cotton exports to Pakistan and Bangladesh this season had sustained the Cotton market. While exports to Bangladesh will continue but the crop in Pakistan will influence export to the country.
  • Sowing activity is stretching which raised worries among mills and prompted them to source Cotton as much as possible. Cotton sowing as on June 24 is lower by 45% from last year.
  • Domestic fundamentals are very strong due to tight supply, with almost all crop from 2015-16 has arrived. Mills are now mainly dependent on private traders/ginners for their requirements and still around 4 months left for new crop to starts.
  • Cotton prices unlikely to see any major correction until new crop, which is expected by October only and a lot will depend on Monsoon.
  • The main factors which will determine the future course of trend are Cotton crop progress in US and India in next month followed by supply-demand situation.
  • We expect rising demand from textile sector couple with the report of lower acreage and need for imports for domestic consumption may keep Cotton prices higher.