India: Cotton outlook turns cautious as CAI reduces 2025-26 output estimate

• Supply to stay ample despite output dip amid huge carryover stock
• Global surplus, rising imports to exert pressure on Indian prices

The Cotton Association of India (CAI) has pegged India’s cotton pressing estimate for the 2025-26 season at 305 lakh bales (one bale equals 170 kg), marking a decline of 7.4 lakh bales from the previous year’s 312.4 lakh bales. This drop primarily stems from lower output projections in key producing states such as Gujarat (-5 lakh bales), Maharashtra (-3 lakh bales), and Telangana (-5.75 lakh bales), partially offset by gains in Andhra Pradesh (+3.75 lakh bales) and Upper Rajasthan (+2.15 lakh bales).

Despite the production dip, total cotton supply is projected at 410.59 lakh bales, higher than last year’s 392.59 lakh bales, owing to a substantial opening stock of 60.59 lakh bales and a forecasted increase in imports to 45 lakh bales. The import rise — up 4 lakh bales y-o-y — suggests a widening gap between domestic availability and mill demand for higher-quality cotton, especially from West Africa and the US.

Demand, stocks, market implications

CAI expects domestic consumption to moderate to 300 lakh bales, down 14 lakh bales from 314 lakh bales last year. The decline reflects weaker demand from the MSME spinning sector (-9 lakh bales) and non-textile uses (-5 lakh bales), while large mills maintain steady consumption at 210 lakh bales. Exports are also seen marginally lower at 17 lakh bales, compared to 18 lakh bales last year, amid subdued global demand and competitive pricing pressures from African origins.

The most significant change lies in closing stocks, estimated to surge to 93.59 lakh bales by September 2026 — up 33 lakh bales from the previous year. This stock build-up indicates a comfortable domestic supply position, likely exerting downward pressure on prices in the near term.

For traders and manufacturers, this evolving scenario signals a range-bound market with mild bearish undertones unless export demand revives or domestic mill consumption rebounds. Import parity and global trends — especially China’s buying patterns and US cotton movement — will remain critical triggers. Mills may find this a favourable window to secure long-term contracts, while traders could expect narrow trading margins due to ample supply and limited export push.

Global production, its impact on India

Global cotton production for the 2025-26 season is estimated at around 117-118 million bales, while consumption is projected close to 116-117 million bales, indicating a marginal global surplus. Higher outputs from the US, Brazil, and Australia are offsetting weather-related declines in Turkey, West Africa, and Mexico. Meanwhile, China’s import demand remains steady, and global trade is expected to hover near 45 million bales.

This balanced-to-slightly-surplus global situation, coupled with India’s elevated carryover stock and higher import estimates, points to continued price pressure in the domestic market. Cheaper foreign cotton, especially from Africa and the US, could keep Indian spot prices in check through early 2026. Unless there is a sudden surge in global demand — particularly from China — Indian cotton prices are likely to stay steady or slightly weak, offering mills a good buying opportunity but limiting speculative gains for traders.

Outlook

With production down but total availability up, India’s 2025-26 cotton market appears well-supplied. Unless fresh export orders or consumption rebound sharply, prices are expected to remain stable to mildly bearish, giving spinners and mills a cost advantage heading into early 2026.