After last season’s bearish expectations failed to fully reflect physical market conditions, rising Indian cotton prices, accelerating arrivals, global demand and the October 31 import-duty deadline are shaping the outlook for 2026–27.
India’s cotton market is entering the 2026–27 season with a renewed gap between market sentiment and physical conditions. Last season, expectations of abundant supplies and large closing stocks shaped a bearish outlook. However, procurement, mill consumption and changes in physical availability produced a more complex picture.
Now, domestic cotton prices are strengthening despite rising arrivals, while global supply-demand estimates indicate consumption above production. The market is also watching speculative positioning, the availability of imported cotton and the potential impact of changes to India’s cotton import-duty policy.
2025–26: When Bearish Expectations Met Market Reality
At the beginning of the 2025–26 season, market sentiment was overwhelmingly bearish. Cheap imported cotton, weak ICE futures, expectations of a large domestic crop and substantial Cotton Corporation of India (CCI) procurement contributed to concerns about excess supply.
Market discussions at one stage centred on closing stocks of nearly 125 lakh bales.
However, the market subsequently developed differently from those early expectations. While attention remained focused on imports, CCI stocks and weak sentiment, spinning-mill economics and actual cotton consumption also influenced availability.
CCI procurement exceeded 1 crore bales. By June 28, procurement reportedly stood at around 105 lakh bales, of which 79.34 lakh bales had been sold.
Private-market availability gradually tightened as larger mills, trading houses and corporate buyers accumulated cotton while many smaller market participants remained cautious.
Closing-stock estimates, however, continue to differ. The Cotton Association of India (CAI) has maintained a higher estimate, while the latest Shykam working balance places 2025–26 closing stocks at around 68 lakh bales.
The difference between these estimates highlights the uncertainty surrounding the final supply balance. Nevertheless, the season demonstrated why cotton consumption, procurement and physical availability need to be assessed alongside prevailing market sentiment.
2026–27 Opens with Stronger Indian Cotton Prices
The new season has begun with renewed strength in the Indian cotton market.
During the week ended October 9, ICE December futures gained 166 points to close at 80.54 cents per pound. Indian cotton prices recorded a sharper increase, with domestic 29 mm cotton rising by approximately ₹2,000–₹2,500 per candy to ₹66,000–₹66,500.
The reported all-India average kapas price reached around ₹8,520 per quintal.
Physical international cotton prices also remained firm relative to futures. On October 8, the Cotlook A Index stood at 90.65 cents per pound, compared with December ICE futures at 79.94 cents. This represented a premium of 10.71 cents per pound.
The gap suggests that physical cotton prices remain substantially above the futures benchmark, although the relationship between the two needs to be assessed alongside quality, location and other market factors.
Global Cotton Consumption Exceeds Production
The US Department of Agriculture’s October balance estimates global cotton production at 117.95 million 480-pound bales, against consumption of 123.08 million bales.
These estimates indicate that global cotton use is expected to exceed production, making existing stocks and trade flows important to the market outlook.
India’s cotton consumption also remains above domestic production in the USDA’s current estimates, reinforcing the importance of inventory levels and imports in meeting demand.
However, the futures market is showing a different signal. Managed Money net length declined for six consecutive reports, falling from more than 100,000 contracts in early September to 57,118 contracts by October 6.
This decline in speculative net length, despite stronger prices, suggests that the latest rally has not been accompanied by equivalent confirmation from speculative positioning.
The market therefore has supportive physical indicators, but the futures positioning trend remains a factor to monitor.
Rising Arrivals Will Test Price Strength
Indian cotton arrivals have increased from around 30,000 bales per day earlier to an estimated 50,000–55,000 bales per day.
The next few weeks will help determine whether the current price strength can withstand the increase in harvest supplies.
If prices remain firm despite accelerating arrivals, it could indicate that underlying demand and physical availability are supporting the market. Conversely, a sharp decline in kapas prices under harvest pressure could weaken the current bullish outlook.
CCI activity will remain another important indicator. After reducing its offer prices for two consecutive weeks, the corporation increased its offer by ₹300 and sold 269,400 bales. Sales were almost equally divided between mills and traders.
The response from buyers and the pace of subsequent sales will provide further information about procurement demand and market conditions.
October 31 Import-Duty Deadline in Focus
The customs-duty exemption on imported cotton is currently scheduled to run until October 31, 2026.
The expiry or extension of the exemption could influence procurement decisions by Indian spinning mills. The treatment of imported cotton will be particularly important as domestic arrivals increase and mills assess their sourcing requirements.
Other variables include movements in the rupee, higher financing costs and the relative economics of cotton and polyester. These factors can influence fibre selection, import decisions and the competitiveness of textile manufacturers.
The policy decision around October 31 is therefore one of the key developments that cotton-market participants will be watching.
Cottonguru’s Outlook: Physical Market Signals Remain Critical
The 2025–26 season highlighted the risks of relying too heavily on a single market narrative. Expectations of abundant supply did not fully capture the effects of procurement, consumption and changing physical availability.
For 2026–27, the signals remain mixed, but Indian cotton prices have started from a firmer base. Rising arrivals will test that strength, while global supply-demand estimates, speculative positioning and India’s import-duty policy will influence the market’s direction.
Three questions will be particularly important in the coming weeks:
- Will kapas prices hold as arrivals peak?
- Can ICE cotton futures sustain levels above 80–82 cents per pound?
- Will India restore the cotton import duty after October 31?
The answers could determine whether the current price strength develops into a sustained trend or proves to be a temporary phase.
For charts and a visual market snapshot, readers can also refer to the Cottonguru Cotton Weekly Update.