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Cotton

Fundamentals

Cotton yesterday settled down by -0.72% at 22080 as a stronger U.S. dollar countered support from robust demand and bets for lower ending stocks in this week's federal supply-demand report. Global cotton stock levels are expected to drop to 21.1m tonnes by the end of 2020/21 as consumption is set to outpace production. The cotton consumption forecast has been revised upward this month from 24.2m tonnes to 24.5m tonnes, and while the projected 7% year-overyear increase is not nearly enough to offset the losses caused by the Covid-19 pandemic, it is expected to outpace production, thus drawing stocks down by the end of the season. According to the latest update from the International Cotton Advisory Committee (ICAC), stock levels are forecast to be down 1% on last year. Meanwhile, the Secretariat is projecting an increase in global trade. Both China and Pakistan are forecast to increase imports, the former benefitting from the price gap between domestic and foreign cotton and the latter due to a decrease in domestic production. Cotton prices in the country have risen by more than 15 per cent from its MSP after the price of cotton in the global market and farmers are no longer dependent on the purchase of government agencies. Atul Gantra, president of the Cotton Association of India, says that white gold has really become gold for farmers this year. In spot market, Cotton dropped by -10 Rupees to end at 22090 Rupees. Technically market is under long liquidation as market has witnessed drop in open interest by -1.92% to settled at 7697 while prices down -160 rupees, now Cotton is getting support at 22000 and below same could see a test of 21920 levels, and resistance is now likely to be seen at 22210, a move above could see prices testing 22340.

Trading Idea for the day

Cotton trading range for the day is 21920-22340.

Cotton edged down as a stronger U.S. dollar countered support from robust demand and bets for lower ending stocks

The cotton consumption forecast has been revised upward this month from 24.2m tonnes to 24.5m tonnes

Both China and Pakistan are forecast to increase imports, the former benefitting from the price gap between domestic and foreign cotton

Cocudakl

Fundamentals

Cocudakl yesterday settled up by 0.56% at 2326 as rising cotton prices and stable demand from the cattle feed industry continues supporting the oil cake markets. Support seen as export prospects remain better for Indian cotton and domestic demand continues improving post lock down phase. As compared with cotton seed, the oil cake (cotton oil cake) prices have seen limited upside, since this commodity cannot be stored for a longer period, hence the stockists and traders generally prefer to sell without much price hikes, or even at discounts, whenever buying interest reduces. The USDA’s last month’s release conveyed lowering of India’s Cotton production estimate by 500,000 bales after considering the rising instances of pest infestation. Pakistan’s production is estimated lower by 200,000 bales higher while Australia’s production may be 100,000 bales higher. World consumption is projected 1.5 million bales higher versus previous estimate with China’s forecast being 1.0 million bales higher, reflecting growing domestic textile demand and exports. There are optimistic views hopes that demand for cotton products in near term shall be robust from the global economic rebound amid concerns over chances of a significant reduction in the ending inventory. This year the production of Indian cotton is expected near 360 lakh bales and as per trade sources, around 270-275 lakh bales have arrived in the country till now. In Akola spot market, Cocudakl dropped by -4.95 Rupees to end at 2391.55 Rupees per 100 kgs. Technically market is under fresh buying as market has witnessed gain in open interest by 4.08% to settled at 108400 while prices up 13 rupees, now Cocudakl is getting support at 2302 and below same could see a test of 2278 levels, and resistance is now likely to be seen at 2340, a move above could see prices testing 2354.

Trading Idea for the day

Cocudakl trading range for the day is 2278-2354.

Cocudakl gained as rising cotton prices and stable demand from the cattle feed industry continues supporting the oil cake markets.

USDA conveyed lowering of India’s Cotton production estimate by 500,000 bales after considering the rising instances of pest infestation.

There are optimistic views hopes that demand for cotton products in near term shall be robust from the global economic rebound

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