Is US Cotton Really Cheaper? The Numbers Tell a Very Indian Story!!

~Sumon Mûkhöpadhuæy.

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Synopsis:

A data-driven breakdown of global cotton pricing myths — revealing why Indian cotton remains structurally cost-competitive for Bangladesh even when U.S. cotton appears cheaper on international benchmarks. By separating futures prices from real landed costs, this analysis exposes how freight, quality premiums, and trade mechanics shape the true economics of cotton sourcing.

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The core question is simple: Is cotton cheaper from the United States than from India after all costs are included?

And the short answer, based on available data: No — under normal commercial math, Indian cotton tends to be cheaper for Bangladesh to source than US cotton after you account for quality, freight, duties, and landed costs.

Let’s break it down with real market indicators and hard figures.

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🧨 What Are Cotton Prices Globally?

On global markets, the standard benchmark — U.S. Cotton #2 Futures — is trading around 62 cents per pound as of early 2026. That’s roughly $1.36 per kilogram on the futures board.

That price reflects the global physical and futures value, not a domestic mandi or landed cost.

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🧨 What About Indian Cotton Prices?

In Indian domestic mandis (local market yards), cotton is trading near ₹73–₹76 per kilogram, depending on quality and region.

At a typical exchange rate, that works out to roughly $0.88–$0.92 per kg — a significantly lower base price than the international futures figure.

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🧨 So India Has Cheaper Base Prices — What’s the Confusion About US Cotton?

💡 a) Indian cotton is often cheaper at the mandi.

Domestic trading prices in India are lower than the international benchmark — even before freight, insurance, or port charges.

That alone undermines the claim that US cotton is inherently cheaper.

💡 b) But global markets trade by grade — not just headline price.

U.S. cotton exports often consist of different quality segments (extra-long staple, highly uniform fiber), which command premiums. Buyers choose imported cotton when:

🔹 They need a specific fiber quality

🔹 Local supply of that grade is tight or unavailable

That’s a quality choice, not a blanket price advantage.

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🧨 What Do Traders Actually Say About the Price Gap?

In industry commentary, representatives of Indian textile associations have stated that even if US cotton is offered with zero duty, the price difference between Indian cotton and international cotton is only about ₹2–₹3 per kg.

That’s a negligible spread in global commodities — meaning any perceived advantage vanishes after:

🔹 Ocean freight costs

🔹 Port handling and inland transport

🔹 Storage and financing

🔹 Quality premiums or discounts

No sane mill would buy U.S. cotton merely because the raw price was a few rupees lower — especially when Indian cotton is cheaper to start with.

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🧨 Bangladesh’s Actual Import Pattern

Bangladesh sources cotton from multiple origins:

🔹 India

🔹 Brazil

🔹 Benin

🔹 United States

For example, in the fiscal year 2023–24:

🔹 Brazil supplied the most cotton

🔹 Benin was second

🔹 U.S. cotton accounted for about 10% of total cotton imports by value

This makes it clear that Bangladeshi buyers are diversifying based on quality and supply needs, not simply chasing a mythical “cheaper US price.”

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🧨 Do Duties or Trade Deals Make US Cotton Cheaper for Bangladesh?

From time to time, trade agreements or temporary duty waivers are cited as reasons why U.S. cotton could undercut Indian cotton in Bangladesh. However, tariffs are only one small component of landed cost — and not the dominant one in cotton trade economics.

Even when import duties are reduced or removed:

🔹 The U.S. base export price still tracks international benchmarks, which historically sit above Indian mandi prices in most seasons

🔹 Ocean freight alone adds a material cost layer that Indian cotton does not face due to geographic proximity

🔹 Handling, insurance, port storage, and financing costs apply equally — or higher — to long-haul imports

In practice, industry feedback consistently shows that duty relief may narrow the gap slightly, but rarely reverses the cost equation in favour of U.S. cotton on a sustained basis.

At best, zero-duty structures can make U.S. cotton temporarily competitive for specific grades.

They do not transform it into a structurally cheaper supply source than India.