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Do I need yarn on cones for machine knitting?

You don't need yarn on cones to machine knit, but there are some good reasons you might prefer them.

No. You do not need yarn on cones to machine knit. Yarn from balls, skeins, cakes, or cones can all be used successfully. Cones are simply convenient, and many machine knitters prefer them.
Two cones of yarn with close-up views showing different yarn weights and textures.

Coned yarn comes in different weights and fibers. Choose yarn that's appropriate for your knitting machine and the fabric you want to create.

Coned Yarn Is a Choice, Not a Requirement

You don't need special yarn on cones to use a knitting machine. Yarn from balls, skeins, cakes, or cones can all be used successfully.
Many machine knitters prefer cones simply because they're convenient. A cone can contain a large amount of yarn, which means fewer joins when knitting larger projects, and the yarn can feed smoothly as you knit.
But don't choose a yarn just because it comes on a cone. The important consideration is whether the yarn is appropriate for your machine and for the fabric you want to create.
As always, swatch first. The same yarn may require different tension settings on different machines, and the fabric you create is more important than how the yarn was packaged.
Prefer knitting from cones?

Yarn for Knitting Machines

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Yarn weights for fine, standard, mid-gauge, and bulky knitting machines

A yarn isn't suitable for your knitting machine simply because it comes on a cone. Choose yarn based on the yarn weight, your machine, and the fabric you want, and always swatch first.