India: Cotton acreage rebound likely in 2026 as prices recover; El Niño may cap upside

• Higher kapas prices revive farmer interest after multi-year acreage decline
• Weather risk and crop competition to decide actual sowing expansion

India’s cotton market is entering a critical transition phase, with early signals pointing toward a potential acreage recovery in the 2026 kharif season. After consecutive years of decline, improving kapas prices are beginning to restore farmer confidence, especially in key producing states like Gujarat and Maharashtra. The recent price rebound is shifting farm economics in favour of cotton, at a time when earlier weak realisations had pushed growers toward alternative crops.

Over the past two seasons, cotton acreage contracted sharply as farmers increasingly shifted to crops such as soybean, pulses, and spices, driven by better returns and lower risk. This structural shift was further accelerated by persistent challenges in cotton cultivation, including pink bollworm infestations, erratic rainfall, and rising labour costs. As a result, India’s cotton area dropped significantly from its peak levels, even as yields saw only marginal improvement.

The current recovery in cotton prices is now altering this trend. Higher kapas realisation is improving gross margins for farmers, particularly in rain-fed regions where crop choice is highly price-sensitive. This is expected to encourage partial acreage reversal in the upcoming sowing season. For ginners and spinning millers, this shift is crucial, as it signals the possibility of improved domestic availability after a phase of tight supply and rising import dependence.

El Niño uncertainty

However, the acreage outlook remains highly weather-dependent. The potential emergence of El Niño in 2026 introduces significant uncertainty, as it is typically associated with below-normal monsoon rainfall in India. Any delay or weakness in monsoon onset could limit sowing progress and offset the positive impact of higher prices.

At the same time, competition from alternative crops is unlikely to ease. Soybean, groundnut, and other kharif options continue to offer attractive returns in several regions, which may restrict a sharp shift back to cotton. This suggests that while acreage may recover, the upside is likely to be gradual rather than aggressive.

Going forward, the cotton market will be driven by a combination of price sustainability and monsoon performance. If prices hold firm and rainfall remains supportive, India could see a meaningful acreage rebound in 2026. However, any weather disruption or price correction could quickly reverse farmer sentiment. For market participants, the next 60-90 days will be critical in shaping the supply outlook for the upcoming season.