The major factors which will decide cotton prices in India in the coming months are exports and domestic mill demand for cotton. Cotton supply in the domestic market is expected to be sufficient as export and consumption will be lower during the current cotton season.
Total availability of cotton is pegged at 398 lakh bales versus an estimated consumption of 309 lakh bales. Exports are expected to decline by 40 per cent in 2016-17 as compared to last year. The yield forecasts for cotton will increase by 10 per cent due to a sudden spell of heavy rains in the cotton growing regions of Maharashtra, Gujarat, Telangana and Karnataka during the last weeks of September. But there are every chances of delay in arrivals.
The area under cotton is lower this year because farmers have sown other crops like maize and pulses due to lower profits, increasing vulnerability to pest attacks, and declining groundwater levels due to two years of drought in the country, especially in the northwest.