India's Cotton Production Surges as Stocks Head for Multi-Year Highs

India's cotton sector is witnessing a significant transformation this season. The Cotton Association of India (CAI) has revised the country's cotton production estimate for 2025–26 upward to 317 lakh bales (170 kg each), marking an increase of 7.50 lakh bales from the previous month's projection. This upward revision, driven primarily by stronger arrivals from Telangana and Maharashtra, comes at a time when domestic mill consumption is slowing and global demand remains tepid. The combination of rising output, elevated imports, and weakening consumption is creating an unusual supply glut that could reshape India's cotton market dynamics in the coming months.

Production Gains Led by Telangana and Maharashtra

The latest revision reflects robust cotton arrivals from key producing states. Telangana leads the charge with an upward revision of 4.50 lakh bales, followed by Maharashtra with an additional 3.00 lakh bales. Smaller gains were also recorded in Karnataka and Tamil Nadu, underscoring broad-based improvement across India's cotton belt. This production uptick is particularly noteworthy given earlier concerns about erratic monsoons and pest pressure. However, the good news on the production front contrasts sharply with demand-side realities. CAI has cut India's cotton consumption estimate for 2025–26 to 305 lakh bales, down from 314 lakh bales last season, signaling slower mill activity amid subdued demand for yarn and fabric. By December 31, 2025, consumption stood at just 76.25 lakh bales, indicating a relatively soft start to the season. For deeper insights into agricultural commodity trends, Commodity Insights offers comprehensive market analysis.

High Imports and Weak Exports Widen the Supply Gap

Despite stronger domestic production, India's cotton mills continue to rely heavily on imports, with CAI maintaining its import estimate at 50 lakh bales for 2025–26, compared to 41 lakh bales last year. By the end of December 2025, approximately 31 lakh bales had already arrived at Indian ports, highlighting mills' preference for securing quality fiber to meet specific processing requirements. On the export side, however, the picture is less encouraging. CAI has lowered its shipment forecast to 15 lakh bales, down from 18 lakh bales in 2024–25, as Indian cotton struggles to compete on price in the global market. By December 31, 2025, only 4.50 lakh bales had been shipped, reflecting weak international demand and pricing pressures. This imbalance between high imports and low exports is further amplifying domestic availability and contributing to the stock buildup.

Closing Stocks Expected to Jump Sharply

The arithmetic is clear: higher production and imports combined with lower consumption and exports are setting the stage for a dramatic increase in closing stocks. Total cotton supply for 2025–26 is estimated at 427.59 lakh bales, compared with 392.59 lakh bales a year earlier. The available surplus is projected to surge to 122.59 lakh bales, up from 78.59 lakh bales last season. As a result, closing stocks at the end of September 2026 are expected to climb to 107.59 lakh bales, nearly double the 60.59 lakh bales recorded at the end of the previous season. By December 2025 itself, stocks had already reached 166.03 lakh bales, distributed among textile mills (66 lakh bales) and CCI, ginners, traders, and other holders (100.03 lakh bales). This stockpile represents both a challenge and an opportunity—while it may pressure prices in the near term, it also provides a cushion against future supply disruptions and offers mills greater procurement flexibility.

Conclusion

India's cotton sector is navigating a complex phase marked by rising production, weakening domestic demand, and elevated stock levels. The CAI's upward revision of output to 317 lakh bales, driven by stronger performances in Telangana and Maharashtra, highlights the resilience of India's cotton farmers. However, with mill consumption declining to 305 lakh bales and exports falling to just 15 lakh bales, the supply-demand imbalance is widening. High imports of 50 lakh bales further underscore mills' quality concerns and reliance on foreign fiber. The projected closing stock of 107.59 lakh bales by September 2026 signals a period of abundant availability but also raises questions about price sustainability and market dynamics. As stakeholders monitor arrivals, consumption patterns, and global demand trends, India's cotton industry must strategically manage this surplus to maintain market stability while supporting farmer incomes and mill competitiveness in an increasingly uncertain global cotton landscape.