Cotton prices are rising in India.

Among the reasons are crop damage following erratic rainfall and pink bollworm attacks on standing crops in major growing regions. Raw cotton prices have turned around from below the minimum support price, due primarily to a surge in mills’ demand. The lower output last year and delayed arrivals this year have helped the price rise. A continuous downpour in major growing regions has flooded cotton fields.

Rising cotton prices are likely to compound the woes of spinning mills, which have been facing weak demand from China and Bangladesh, which buy over 75 per cent of India’s cotton yarn. Some mills have already reduced their production capacity. But the rising prices have raised hopes for a further increase in the use of manmade fiber in the Indian textile industry. Shortage of cotton yarns and high prices are major factors which have led to a better demand for polyester yarns. Moreover, domestic manufacturers of polyester yarns have been able to increase their capacity utilisation as the anti-dumping duty imposed on China led to a pick-up in demand for domestic yarn compared to imported yarns.

In the international market, cotton continues to trade lower on the US-China trade war.