Domestic cotton prices are climbing due to strong mill demand and firmer global rates. The Cotton Corporation of India has raised prices by ₹700 per candy, creating potential cost pressure for major textile manufacturers. Investors are watching how these companies manage higher raw material expenses during this peak season.
Domestic cotton prices have trended higher, influenced by sustained buying from textile mills and a rise in global prices. The Cotton Corporation of India (CCI) recently increased its selling prices by ₹700 per candy, reflecting tight local supplies and a slight delay in the arrival of the new crop. For listed textile and spinning companies, this rise in raw material costs is a key factor that can influence financial performance in the coming months.
Global factors are also supporting these price trends. Cotton futures on the ICE exchange have been trading near 84 cents per pound. A combination of weather-related supply concerns in major growing regions and expectations of tighter global stockpiles has kept international sentiment firm. In India, while cotton sowing has progressed to over 103 lakh hectares, it remains slightly behind the figures recorded at this time last year, which adds to the tight supply outlook.
To help manage this situation, the Indian government has suspended customs duties on cotton imports until October 2026. This move allows spinning mills to source fiber from international markets if domestic prices become too expensive. This policy is intended to act as a buffer, preventing local prices from spiking too sharply and helping domestic textile exporters stay competitive in global markets.
Investors should note the potential impact on profit margins for major textile manufacturers, such as Vardhman Textiles, Trident, and Nitin Spinners. When the cost of raw cotton rises, these companies face the challenge of deciding whether to absorb the extra costs or pass them on to customers by raising yarn prices. If spinning mills are unable to pass on these costs due to weak global demand for yarn, their profit margins may come under pressure in upcoming quarterly reports.
The industry is currently following a cautious buying strategy, with mills purchasing only what they need for immediate production rather than building large inventories. Moving forward, the most important factors for investors to track include the progress of the monsoon, which affects final crop yields, and the actual arrival volumes of the new crop in the coming weeks. Quarterly financial results will serve as the primary indicator to assess whether these companies are successfully navigating the challenges posed by fluctuating raw material prices.