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Cotton

Fundamentals

Cotton yesterday settled down by -1.37% at 21610 as arrivals have been higher and record carryover stocks from last season. While CAI has pegged the carryover stocks at 115 lakh bales, the CCPC has estimated it at 97.95 lakh bales. Cotton farmers in the country have taken advantage of higher global price for the natural fibre this season (October 2020-September 2021), resulting in at least 80 per cent of the production being sold till now. As a result, most of the ginning mills in north and western parts of the country that process kapas (raw cotton) into ginned cotton are likely to shut operations from April this year. Most of the cotton produced this season have arrived across various markets in the country mainly since prices have ruled higher than the minimum support price (MSP) of ₹5,515 a quintal since the beginning of the October. According to an estimate by the Cotton Association of India, a body of traders, arrivals till February 28 this year since October 1 were 298.89 lakh bales (of 170 kg). The arrivals are against CAI’s projection of the cotton crop production at 358.50 lakh bales against 360 lakh bales last season. The Committee on Cotton Production and Consumption (CCPC), a body representing all stakeholders in the textile industry including government officials, has estimated this season’s crop at 371 lakh bales (358.50 lakh bales last season). In spot market, Cotton dropped by -40 Rupees to end at 22030 Rupees. Technically market is under long liquidation as market has witnessed drop in open interest by -7.74% to settled at 4968 while prices down - 300 rupees, now Cotton is getting support at 21460 and below same could see a test of 21300 levels, and resistance is now likely to be seen at 21880, a move above could see prices testing 22140.

Trading Idea for the day

Cotton trading range for the day is 21300-22140

Cotton prices dropped as arrivals have been higher and record carryover stocks from last season.

CAI has pegged the carryover stocks at 115 lakh bales, the CCPC has estimated it at 97.95 lakh bales.

Cotton farmers cash in on global price trend, sell 80% of this season’s output

Cocudakl

Fundamentals

Cocudakl yesterday settled down by -0.79% at 2371 as around 25 to 30 lakh bags of cottonseed cake are lying in Kadi, its more than estimated. Considering the rise in binola and supply, the possibility of a fall in the coming days may be less market compelling. All mills of cottonseed in Kadi will be demolished in no time, after that barely seven to eight mills are expected to be operational. Khali stock is very low in centers other than Kadi. There is a possibility of one to two lakh sacks of stock in some traditional centers. Cottonseed stock is estimated to be very low all over Gujarat. Retail demand is currently very sluggish in Cottonseed Khali. Most of the ginning units across the country have been closed in the month of March due to declining cotton income. New season cotton sowing has not even started. There is still six months left for the new season. Most of the ginning units are coming off due to closure. Most of the cottonseed-khali producers of Gujarat were in a recession a month ago, they sold cottonseed and cottonseed khali extensively in Maharashtra, Madhya Pradesh and other states of the countryWith CCI introducing MSP (Minimum Support Price) to cotton farmers, farmers came to the market to sell cotton faster. In Akola spot market, Cocudakl dropped by -4.95 Rupees to end at 2465.25 Rupees per 100 kgs. Technically market is under long liquidation as market has witnessed drop in open interest by - 1.1% to settled at 118240 while prices down -19 rupees, now Cocudakl is getting support at 2357 and below same could see a test of 2342 levels, and resistance is now likely to be seen at 2390, a move above could see prices testing 2408.

Trading Idea for the day

Cocudakl trading range for the day is 2342-2408.

Cocudakl prices dropped as around 25 to 30 lakh bags of cottonseed cake are lying in Kadi, its more than estimated

Most of the active crushing mills in Kadi are only 7 to 8 mills

Considering the rise in binola and supply, the possibility of a fall in the coming days may be less market compelling

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