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Cotton

Fundamentals

Cotton yesterday settled up by 0.87% at 22110 after 2020/21 U.S. cotton forecasts show lower production, and ending stocks relative to last month. Production is reduced 250,000 bales to 14.7 million, based on the March 9 Cotton Ginnings report. Consumption is reduced 100,000 bales due to the industry’s lagging recovery from the previous year’s sharp losses. Ending stocks are 100,000 bales lower this month at 4.2 million bales. The projected marketing year average price received by upland producers of 69.0 cents per pound is up 1 cent from last month. The global 2020/21 cotton supply and demand estimates show lower production and ending stocks compared with last month, but higher mill use and trade. Estimated global production is reduced nearly 830,000 bales, largely due to lower Brazilian and U.S. production. Cotton import pace and indications of recovering global consumption helped boost consumption estimates for Turkey, Bangladesh, Pakistan, and Vietnam, more than offsetting lower projections for the United States and Taiwan. Imports are also projected higher in the countries with larger consumption, and the forecast for 2020/21 world trade is more than 600,000 bales higher this month. On the export side, higher Indian exports account for most of the increase as auctions by the Cotton Corporation of India have released much of the cotton purchased last year under the Minimum Support Price program. In spot market, Cotton dropped by -130 Rupees to end at 21960 Rupees. Technically market is under short covering as market has witnessed drop in open interest by -1.31% to settled at 7137 while prices up 190 rupees, now Cotton is getting support at 22050 and below same could see a test of 21980 levels, and resistance is now likely to be seen at 22180, a move above could see prices testing 22240.

Trading Idea for the day

Cotton trading range for the day is 21980-22240.

Cotton prices gained after 2020/21 U.S. cotton forecasts show lower production and ending stocks relative to last month.

Consumption is reduced 100,000 bales due to the industry’s lagging recovery from the previous year’s sharp losses.

Production is reduced 250,000 bales to 14.7 million

Cocudakl

Fundamentals

Cocudakl yesterday settled down by -0.56% at 2313 as the market is getting cotton supplies from the Cotton Corporation of India. However downside seen limited due to stable demand from the cattle feed industry continues supporting the oil cake markets. 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 2392.05 Rupees per 100 kgs. Technically market is under fresh selling as market has witnessed gain in open interest by 7.91% to settled at 116970 while prices down -13 rupees, now Cocudakl is getting support at 2291 and below same could see a test of 2268 levels, and resistance is now likely to be seen at 2330, a move above could see prices testing 2346.

Trading Idea for the day

Cocudakl trading range for the day is 2268-2346.

COCUDAKL dropped as the market is getting cotton supplies from the Cotton Corporation of India.

However downside seen limited due to stable demand from the cattle feed industry continues supporting the oil cake markets.

Further, export prospects remain better for Indian cotton and domestic demand continues improving post lock down phase.

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