Factors that Affect Cotton Prices. Textile Manufacturers in India Must Pay Close Attention


The Indian textile industry has been expressing concern over the rising cotton prices in
domestic and international markets. Textile manufacturers in India looking for cotton fabric material online must be aware of these changes before placing their bids on TEXchange. Cotton prices
fluctuate for various reasons. In this blog, we will discuss how cotton price is determined in
India and the factors that knitted and woven fabric manufacturers must keep an eye on.

How is The Price of Cotton Determined in India?

Every year, the cotton season is commenced in October. Before the season starts, the Ministry
of Agriculture determines the Minimum Support Price (MSP) of two cotton seed varieties to
protect the cotton farmers’ interests.

The Cotton Corporation of India (CCI) is the single largest buyer and seller of cotton and thus
has the highest power to determine cotton prices in the mandi. Every day, the CCI announces
the selling price of cotton, which becomes the maximum price for all, including textile
manufacturers in India and international cotton fabric buyers.

While deciding the MSP, factors like production cost, overall demand-supply situations,
trading terms, impact on the economy, production resources, and usage of land and water are
considered by the Commission on Agricultural Costs and Prices (CACP).

Factors that Affect the Cotton Prices in India

Cotton prices remain the same whether buying wholesale fabric online or conventionally
through Damodar Menon International. Major factors that influence the price of cotton fabric

  • Production: Risks associated with farming and harvesting cotton crops, such as
    weather conditions, pests, diseases, water supply, etc., directly impact cotton
    production in the long term.
  • Domestic Economic Factors: Cotton prices can be influenced by the country’s
    economic trends and indicators. Inter-crop price parity, demand-supply situation, and
    international market situation are a few major factors that affect the prices relating to
    the domestic economy.
  • Government Policies: Subsidies, tariffs, regulations, and other policies set by the
    government can affect the production capacity and costs, ultimately determining the
    cotton price. For instance, cotton subsidies have remained one of the controversial
    issues in international trade at the World Trade Organization (WTO). Farmers of least
    developing countries often protest that developed countries’ support, especially the
    USA, has made cotton manufacturing uncompetitive in the global south.
  • Share Speculations: Trading activities can heavily impact cotton prices, as
    speculative buying can create volatility. Cotton futures and commodity markets
    initiate trading activities by attracting speculators and investors.
  • Quality of Cotton: Woven fabric manufacturers strive to gain the best prices for
    cotton fabric material online by assessing the quality of the crop. Cotton quality is
    evaluated based on fibre properties, colour, and length.
  • Global Trading Markets: TEXchange and other global commodities markets, where
    cotton (greige, RFD, and organic) is traded among buyers and sellers every day, have
    the maximum impact on the price of cotton. These markets represent updated, real-
    time demand and supply of cotton all over the world.
  • Weather Conditions: Adverse weather conditions, such as floods, drought, and
    storms, can reduce crop yields and disrupt the demand-supply chain, which invariably
    leads to higher prices.
  • Demand for Alternative Textiles: The demand for other fibres like modal, viscose,
    and synthetic fibres like chiffon and georgette can affect the price of wholesale fabric
    online. This happens when there’s a shift in consumer preferences, fashion trends, and
    market needs.

    However, at present, the demand for cotton is more than ever due to the preferences of
    eco-conscious consumers, who favour organic cotton and sustainable materials over

    It is important to remember that these abovementioned factors can influence and interact with
    each other, resulting in very complex dynamics in the cotton industry and global textile

    Improve your cotton business in the global market by registering on TEXchange Global for
    free, a premiere platform that connects textile manufacturers in India and cotton traders

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