While the global textile industry was bracing for weak demand, India's Cotton Association revised its estimates in the opposite direction. For 2025/26, consumption is now projected at 34.8 million bales, up 2.9 million from the previous year, while imports jumped by 1.3 million to 6 million bales. This combination signals that India's spinning activity is recovering faster than expected.
Supply-Demand Boom: Output and Imports Drive Growth
According to the Crop Committee meeting on July 27, India's cotton ginning output is now estimated at 33.7 million bales, up 0.3 million from the prior estimate and 2.46 million above last year. Maharashtra contributed the most, with output raised to 11.8 million bales, up 2.7 million year-on-year. The supply improvement is not only from output; imports were also revised sharply higher to 6 million bales, up 1.9 million from last year, reflecting tight domestic supply of high-quality cotton and rising mill demand.
The Paradox of Consumption Recovery and Export Decline
The upward revision in consumption is the most notable change. At 34.8 million bales, consumption exceeds the prior forecast of 33.8 million and far surpasses last year's 31.9 million, indicating a clear rebound in capacity utilization across India's textile chain. However, exports were cut to 1.5 million bales from 1.8 million, below last year's level. This divergence suggests India's cotton is losing global competitiveness while domestic demand absorbs exportable surplus. International buyers may shift toward Brazilian, American, or Australian cotton.
High Stocks: Price Pressure Under Loose Supply
The balance sheet shows total supply of 45.259 million bales, up 6 million from last year, with ending stocks raised to 8.959 million bales, 3.4 million higher. Surplus availability is 10.459 million bales, well above last year's 7.359 million. The stock build implies downward price pressure on domestic cotton for the rest of the season, giving Indian mills a cost advantage and potentially lowering their yarn export prices. For Chinese buyers, this could mean more competitive import prices for Indian yarn, but also potential disruption to domestic markets.
Transmission to China: Multiple Impacts
India's rebalancing is transmitting through trade channels. With imports up and exports down, global cotton trade flows will adjust, and China, as the largest importer, may see changes in supply sources. Meanwhile, lower Indian cotton prices could drag down average import prices of cotton yarn, benefiting downstream weaving mills. However, if India's consumption recovery persists, its demand for raw cotton may support global price floors, limiting long-term cost benefits for Chinese spinners.