The domestic cotton market is experiencing soft prices despite concerns about a potential decline in production for the 2024-25 season.

Both the Central Government and trade organizations have indicated that cotton production may fall compared to the previous season.

The Union Agriculture Ministry's first advance estimate projects a decrease of about 26 lakh bales, from 325.22 lakh bales in 2023-24 to 299.26 lakh bales in 2024-25. Similarly, the Cotton Association of India has estimated a drop of 23 lakh bales, reducing production to 302 lakh bales.

A major contributing factor to the decline in production is a reduction in the sowing area, particularly in Gujarat, which is the country's leading cotton-producing state.

The area has decreased by 3.11 lakh hectares, from 26.82 lakh hectares last year to 23.71 lakh hectares this season.

Other states like Maharashtra, Telangana, Madhya Pradesh, Andhra Pradesh, Rajasthan, Haryana, and Punjab have also seen significant reductions in cotton cultivation, though Karnataka and Orissa have maintained their sowing areas.

Despite the expected decline in production, cotton prices have remained weak. The domestic demand for cotton is currently low, and the moisture content in the crop is reportedly above the permissible limit, which affects its quality.

In response, the Cotton Corporation of India (CCI) has started purchasing cotton from farmers at the Minimum Support Price (MSP) of Rs 7,121 per quintal for medium fiber and Rs 7,521 per quintal for long fiber varieties.

However, the wholesale market price is hovering between Rs 6,500 and Rs 7,000 per quintal, indicating a soft market despite production concerns.