India: CCI’s MSP buying scales up in 2025-26 season, lifting cotton prices despite weak market signals

• CCI procures 60% higher volumes y-o-y; Telangana leads among states
• Govt absorbs 42% of arrivals, cushioning farmers from sub-MSP prices

The state-run Cotton Corporation of India (CCI) has sharply expanded its market intervention in the ongoing 2025-26 cotton season, procuring around 50 lakh bales at the Minimum Support Price (MSP) so far. This is about 60% higher than the 31 lakh bales purchased by mid-December last year, highlighting the scale of government support amid weak open-market prices. CCI officials said procurement has crossed 2 lakh bales per day, with purchases accounting for nearly 42% of total arrivals of 118 lakh bales, underscoring how central MSP operations have supported prices this season despite weak market signals.

State-wise procurement

In value terms, progressive procurement up to 19 December stands at 230.23 lakh quintals worth INR 18,238 crore. Buying has been concentrated in the core cotton belts, led by Telangana (93.87 lakh quintals, INR 7,445 crore) and Maharashtra (47.69 lakh quintals, INR 3,779 crore). Karnataka has seen purchases of 21.49 lakh quintals valued at INR 1,708 crore, while Gujarat stands at 19.23 lakh quintals worth INR 1,546 crore. Andhra Pradesh, Rajasthan, Haryana, Odisha, and Punjab together account for the balance, reflecting a broad-based intervention rather than a region-specific operation.

Prices rise as procurement picks up

This aggressive procurement has lent visible stability to cotton prices, which had started the season well below MSP. The Centre has fixed MSP at INR 7,710/ quintal for medium staple and INR 8,110/quintal for long staple cotton for 2025-26. At the season’s start, quality kapas prices in parts of Karnataka were quoted around INR 7,200-7,300/quintal. With sustained CCI buying, private trade prices have firmed up to around INR 7,800/quintal, while pressed cotton prices rose by INR 2,000-2,500 per candy (356 kg) to about INR 54,000. Despite this recovery, market prices in many centres still trail MSP, keeping farmers inclined to sell to CCI rather than private buyers.

MSP dependence remains heavy amid quality concerns

The underlying fundamentals explain the heavy MSP dependence. Lower acreage and adverse climate, including excess and unseasonal rains, have reduced both output and quality across most cotton-growing states. The Agriculture Ministry’s first advance estimate pegs 2025-26 cotton production at 292.15 lakh bales (170 kg each), marginally lower than 297.24 lakh bales last year. Quality concerns have also narrowed the usable supply for spinning millers, even as arrivals remain steady.

Outlook

Looking ahead, sustained MSP procurement will continue to shield farmers and support ginners’ kapas realisation in the near term. However, it also means a larger share of the crop is moving into government stocks, shifting market influence to CCI’s eventual selling strategy. For spinning millers, the near-term cushion comes from duty-free cotton imports allowed until the end of the year, which cap domestic lint prices despite MSP support. Brokers should expect a market bound to a narrow range, where downside is protected by CCI buying, but upside is limited by import parity and expectations of future CCI stock liquidation. Overall, MSP intervention has stabilised sentiment, but the next phase of price direction will hinge on demand recovery and how quickly government-held cotton is released back into the market.