Cotton yesterday settled up by 1.56% at 16230 as support seen after cotton body lowers crop estimates to 330 lakh bales from 354 lakh bales due to locust attack, less care during lockdown. It is observed that the recent Locust attack and Covid19 on cotton plantings may not affect the cotton plants to impact the acreage or expected yields. Approximately 2 months demand supply mismatch is presently observed in entire supply chain for the crop season 2019-20 & 20-21. It is expected that the carry over stock will be in huge considerable quantities, thereby breaking previous records of at least 5 years. At present the Indian Cotton is the cheapest in the world due to which there is a good demand from importing countries thereby hitting the expected figures to 50 Lakh Bales and correspondingly reducing the estimated imports by 5-10 lakh bales. Since the rains are expected to be normal this year and also the considerable quantity of seed cotton is with Farmers, it is expected that the stock of seed cotton will also be carried to the new crop season. Even though the consumption has reduced in last two months but looking at the present demands in domestic as well as international markets, the price of cotton bales is expected to rise in coming weeks. Technically market is under short covering as market has witnessed drop in open interest by -1.19% to settled at 3804 while prices up 250 rupees, now Cotton is getting support at 16140 and below same could see a test of 16050 levels, and resistance is now likely to be seen at 16330, a move above could see prices testing 16430
Cocudakl yesterday settled up by 2.19% at 2052 after update that due to heavy moisture. In recent session prices seen supported due to supply shortages as many cotton seed crushing units are closed. Andhra Pradesh aims to reduce the area under cotton in the coming 2020-21 (Jul-Jun) kharif season to 544,000 ha from 654,000 ha last year. Local textile mills and ginners were in distress. Many mills were closed up till now due to the building up of inventory while some mills were working partially but they were near closing. The government has decided to exempt cottonseed oil cake from 5 percent General Sales Tax. Punjab has registered a record production of cotton at 43.25 lakh quintals in 2019-20 season even as the procurement of the crop is still in its last stage. According to the data procured from the Punjab State Agricultural Marketing Board, the state has witnessed a jump of over 26% over the production of 34.68 lakh quintals recorded during the 2018-19 season. The Cotton Corporation of India (CCI) has announced bulk discount for cotton bales with it from 2018-2019 and 2019-2020 cotton seasons. The CCI’s operations under which the corporation procures cotton from farmers at the government declared Minimum Support Price (MSP) of Rs 5,550 per quintal continues till September. Technically market is under short covering as market has witnessed drop in open interest by -12.52% to settled at 27260 while prices up 44 rupees, now Cocudakl is getting support at 2023 and below same could see a test of 1995 levels, and resistance is now likely to be seen at 2077, a move above could see prices testing 2103.
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