A new report by Cotton Incorporated, ‘Cotton As A Possible Bellwether for Global Economies: Why International Cotton Markets Matter’, brings good news for India's cotton industry. The report predicts a stable global cotton market in 2025, with favorable pricing and increasing global demand, offering opportunities for Indian cotton growers and textile manufacturers.

Report findings

Supply: Global cotton production is projected to increase in the 2023-24 crop year, with favorable weather conditions in key producing countries like the US and India. However, potential disruptions like pest infestations and water scarcity could impact output.

Demand: Despite a slight uptick in demand, the global cotton market is expected to remain relatively balanced in the coming years. The study notes that mill use, a key indicator of demand, is projected to increase modestly.

Pricing: Cotton prices have been volatile in recent months, influenced by factors such as fluctuations in the US dollar, changes in speculative activity, and shifts in demand from major consuming countries. The study anticipates continued price volatility in the near term.

Global cotton production outlook

The U.S. Department of Agriculture expects a rise in global cotton production in 2024/25, with an increase of 3.12 million bales to 116.2 million. World mill-use is also projected to grow by 1.4 million to 115.2 million.

United States: A significant increase in production is expected, primarily due to the unusually small crop in 2023. Hot and dry conditions in West Texas impacted the previous year's harvest.

China: As the world's largest cotton producer, China's production increased by 300,000 bales last year. The country also holds reserve stock, making it well-supplied for 2025. However, a housing market crisis and cautious consumer spending could affect demand.

India: The second largest cotton grower faces challenges due to weather and government intervention through minimum support prices (MSPs). This could lead to the government holding cotton stock and potentially selling at a loss.

Pakistan: Cotton production decreased due to seed quality issues, flooding, and extreme heat.

Brazil: With its ability to plant two crops a year, Brazil could be a key player in 2025. The country's record crop last year and its impact on global prices are noteworthy.

Table: Cotton production

Region Production (mn bales) Mill use (mn bales) World 119.5 115.9 United States 18.5 3.3 India 26.5 25 China 30 39

The study highlights India's growing importance in the global cotton market. With a projected increase in both production and mill use, India is poised to play a significant role in meeting global cotton demand. China remains the world's largest consumer of cotton. However, the study notes that recent policy changes and shifts in domestic consumption patterns could impact China's cotton imports in the coming years.

Stable global market benefits Indian growers

Cotton Incorporated forecasts stable cotton prices in 2025, a welcome change from recent volatility. This stability is crucial for Indian farmers who have faced fluctuating incomes due to unpredictable market conditions. Experts point out this stability should enable better planning for Indian cotton growers. Predictable pricing allows farmers to make informed decisions about planting and invest in their operations with greater confidence.

India's role in the global cotton landscape

The report acknowledges India's position as the second largest cotton grower globally. While acknowledging recent weather challenges impacting Indian production, the report highlights the role of India's Minimum Support Price (MSP) system in supporting farmers' livelihoods.

The report also points out challenges for India, including the potential for government-held cotton stocks to be released into the market at a loss, impacting prices. However, the projected increase in global mill use, particularly in countries like China, offers a significant opportunity for India to increase exports and strengthen its position in the global cotton value chain. "Indian textile manufacturers should capitalize on this growing demand by focusing on quality and sustainability to compete effectively in the international market."

The study's findings have significant implications for various stakeholders in the cotton value chain, including farmers, textile mills, and consumers. Understanding the dynamics of the global cotton market is crucial for making informed decisions and navigating the challenges and opportunities that lie ahead.