Indian cotton prices crash amid weak demand

Cotton prices in India have fallen below Rs 60,000 per candy (356 kg) due to weak demand for yarn and garments, with a slight recovery expected around mid-August. The situation worsened following student unrest in Bangladesh, which has halted exports and disrupted goods movement, affecting Indian cotton traders.

The Cotton Corporation of India (CCI) has responded to the slack demand by cutting its sale price by Rs 1,800 per candy, leading to a benchmark price of Rs 56,800 for Shankar-6. Despite a global drop in cotton prices to below 70 cents per pound, domestic spinning mills face challenges due to an 11 per cent import duty, making imported cotton significantly more expensive.

With cotton prices falling to lows not seen in years and below the minimum support price (MSP) set for the upcoming season, market stakeholders remain cautious. The MSP for the 2024-25 crop year has been increased to Rs 7,121 per quintal.

Although sowing has decreased by 5-7 per cent, favorable rainfall and harvest prospects may offset this decline. The industry anticipates a gradual improvement in demand as the season concludes.