India’s Cotton Supply and Demand Situation: Marketing Year 2024-25

As the 2024-25 cotton marketing year unfolds, India's cotton industry is witnessing key shifts in production, imports, and exports. The Cotton Association of India (CAI) has forecasted the country's cotton production to be 30.2 million bales (1 bale = 170 kg), reflecting a 7.1% decrease from the previous year. This decline can be attributed to unfavorable weather patterns, such as excessive rainfall, and a reduction in the area planted with cotton. In key cotton-producing regions like Gujarat, the area planted with cotton has decreased as farmers have opted for crops like groundnuts, which are seen as offering better financial returns. This shift in crop choices has contributed to the overall drop in cotton output.

The North Zone, consisting of states like Punjab, Haryana, and Rajasthan, is expected to produce 3.6 million bales in 2024-25. Meanwhile, in the Central Zone (Gujarat, Maharashtra, and Madhya Pradesh), cotton output is forecasted to be 18.9 million bales, down from 20 million bales last year. The Southern Zone, which includes Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu (NS:TNNP), will contribute 7.2 million bales, a slight drop from 7.4 million bales in the previous season.

Despite the drop in production, India's domestic demand for cotton remains steady, with an unchanged estimate of 31.3 million bales. This stability in demand highlights the growing textile and apparel industries within the country, which continue to consume significant amounts of cotton.

However, exports are expected to fall significantly, from 2.85 million bales last year to 1.8 million bales in 2024-25. This decline is largely due to lower production and the need to prioritize domestic demand. In response to reduced exports, India's cotton imports are projected to rise to 2.5 million bales, compared to 1.75 million bales in the previous year, to meet domestic needs. This rise in imports could lead to increased prices in the global market as demand for cotton from major importing countries like India grows.

In terms of stock, the CAI has forecasted closing stock levels at 2.64 million bales for the current year, a reduction from 3.02 million bales in the previous year. Meanwhile, the opening stock for the 2024-25 season stood at 3.02 million bales, slightly higher than the previous season's 2.89 million bales.

In summary, although production is decreasing, demand is forecasted to remain steady. This would led to an expected rise in imports and a reduction in exports. The cotton market will continue to adjust in response to these shifts, impacting both domestic prices and the global supply chain.