Indian spinning mills cut cotton purchases

Indian spinning mills are significantly reducing cotton purchases as the current season nears its end. Factors such as liquidity constraints, a shift towards synthetic fibers, and sluggish yarn demand are contributing to this cautious approach. Despite holding large cotton stocks, the Cotton Corporation of India (CCI) is struggling to offload its inventory due to weak market demand. Traders are reluctant to purchase cotton on credit given the challenging economic conditions.

The overall textile industry is grappling with slack demand for yarn and declining prices, further dampening cotton consumption. Additionally, bearish sentiment in the global cotton market is exerting downward pressure on domestic prices.

While the government has increased minimum support price (MSP) for cotton to boost farmer incomes, it has had a limited impact on market activity thus far. However, with the upcoming festival season and expectations of improved retail sales, there is hope for a stabilization in yarn and fabric demand in the coming months.

Cotton yarn exports remain steady, with Bangladesh and Europe being key markets. However, the overall bearish sentiment and low cotton prices are likely to persist in the short term.