Weak Rajasthan Cotton Sowing Adds Weather Risk to Global Cotton Outlook

Cotton faces rising weather and acreage risk as Rajasthan’s 2026 kharif sowing data show a sharp drop in planted area amid a weak, delayed Indian monsoon. With global futures near recent lows but rebounding, the market is increasingly sensitive to any further setbacks in Indian output. New data from Rajasthan underline a cautious start to the 2026 kharif season. Total kharif sowing is slightly below last year’s pace, but cotton acreage has fallen steeply as farmers respond to uncertain rainfall and changing crop economics. At the same time, a sluggish, rainfall-deficit monsoon and emerging El Niño signal a higher probability of weather-related supply risk that could support prices if current trends persist.

Prices & Market Tone

ICE Cotton No. 2 futures have recently rebounded off their lows, trading around the equivalent of roughly 1.60–1.70 EUR/kg of lint (converted from ~78 ¢/lb), after a prior month of weakness. The World Bank Cotton A Index last published for late May stood near 2.03 USD/kg, around 1.90 EUR/kg at current FX, indicating physical benchmarks remain at a premium to futures.

Price action suggests a market that had priced in comfortable global supplies but is now starting to factor in renewed weather risks in key producing regions, including India. Volatility is likely to stay elevated as traders reassess 2026/27 balance sheets in light of weaker Indian acreage and uncertain yield prospects.

Supply & Demand Focus: Rajasthan Signals a Shift

Rajasthan’s early kharif numbers indicate total sowing of around 15.60 lakh hectares, slightly below 15.80 lakh hectares in the same period last year. The state has a full-season kharif target of 165.39 lakh hectares, so there is still time to catch up if rains improve, but the composition of planting has shifted markedly.

• Cotton area down sharply: About 4.58 lakh hectares have been sown to cotton so far, versus 6.44 lakh hectares a year ago – a drop of nearly 29%. Farmers are displaying clear caution toward cotton in the early phase of the season.
• Groundnut up strongly: Groundnut sowing has surged to 3.48 lakh hectares from 1.28 lakh hectares, underscoring a strong preference for oilseeds under current price and weather expectations.
• Pulses and coarse grains weaker: Bajra sowing is at 3.51 lakh hectares versus 3.90 lakh hectares last year, and pulses have fallen dramatically to 1.57 lakh hectares from 3.96 lakh hectares, with moth and urad particularly limited.

For cotton, the acreage loss in Rajasthan – a key producer in Northwest India – raises the bar for other states (such as Gujarat, Maharashtra, Telangana) to offset potential output shortfalls. If the monsoon does not materially improve in the coming weeks, India’s overall cotton production for 2026/27 could be revised lower, tightening domestic and potentially global balances.

Weather, Monsoon & Yield Risk

India’s 2026 southwest monsoon has started weakly. As of mid-June, all-India rainfall stands about 28–35% below normal, and the monsoon’s advance over western and central India has stalled. Forecasts from IMD and private forecasters suggest June may remain significantly deficient, with the full-season outlook trimmed to around 90% of the long-period average and an elevated probability of a below-normal monsoon linked to El Niño conditions.

For Rajasthan, where kharif crops are heavily rain-fed, this early moisture deficit explains the cautious sowing pattern and shift away from water-sensitive or lower-margin crops such as cotton and pulses. While a strong monsoon revival in late June–July could allow some recovery in planted area, planting windows are finite, and late sowing can cap yield potential even if acreage stabilizes.

Fundamentals & Market Implications

• India’s exportable surplus at risk: Lower Rajasthan cotton acreage, combined with delayed monsoon onset in other western states, raises the risk that India’s 2026/27 cotton output and export availability will fall short of earlier expectations.
• Shift in cropping mix: The move from cotton and pulses towards groundnut signals farmers’ response to relative price signals and risk perceptions. This can tighten cotton fibre supplies while expanding oilseed availability, influencing inter-commodity price spreads.
• Global balance sensitivity: With futures near the lower half of their 52-week range and physical benchmarks still relatively firm, additional production downgrades in India could trigger a more pronounced price response, particularly if U.S. or Brazilian weather also disappoints.

Trading & Risk Management Outlook

• Producers (India / Rajasthan): Consider incremental hedging on price rallies rather than aggressive forward sales, given acreage uncertainty and yield risk tied to monsoon performance in July–August.
• Spinners & mills: Use current prices to secure part of Q4 2026–Q1 2027 needs, but stagger purchases and keep some flexibility to respond if monsoon recovery brings temporary price dips.
• Speculators: Bias moderately to the long side on weather setbacks in India, but respect technical resistance zones and volatility; options structures (calls or call spreads) may be preferable to outright futures in managing downside risk.

3‑Day Directional Outlook (in EUR terms)

Short-term, cotton prices are likely to react quickly to any signals of monsoon revival or further delay over Northwest and Central India, with Rajasthan’s weak cotton sowing acting as a key bullish reference point.