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Cotton

Fundamentals

Cotton yesterday settled up by 0.36% at 22100 as India’s cotton exports are likely to hit 60 lakh bales (each of 170 kg) for the current season (October2020- September 2021) on cost competitiveness. Trade body Cotton Association of India (CAI) has noted that so far about 60 per cent or 36 lakh bales has been shipped since the start of the season. This is primarily due to Indian cotton’s price competitiveness in the international market. Indian cotton quoted at around ₹44,000-45,500 per candy (each of 356 kg of processed cotton) during the past couple of months. At this rate, the Indian exporters could offer a 10-per cent discount to the international prices, which hovered at around 85.60 cents per pound. For the cotton crop, CAI has revised its output projections downward to 358.5 lakh bales, lower by about 1.5 lakh bales from previous estimate. Last year, the output was expected at 360 lakh bales. CAI, in its latest crop outlook for March, stated that India’s cotton imports will be around 12 lakh bales for the year, which is lower by about 2 lakh bales from the earlier estimated about 14 lakh bales for the season. The likely drop is attributed to the recent hike in the import duty on long-staple variety of cotton. Last year, India had imported 15.50 lakh bales of the fibre. As per the CAI data, as on February 28, total 7 lakh bales has already arrived at Indian ports. In spot market, Cotton gained by 10 Rupees to end at 22100 Rupees. Technically market is under short covering as market has witnessed drop in open interest by -4.77% to settled at 6230 while prices up 80 rupees, now Cotton is getting support at 21950 and below same could see a test of 21790 levels, and resistance is now likely to be seen at 22220, a move above could see prices testing 22330.

Trading Idea for the day

Cotton trading range for the day is 21790-22330.

Cotton prices gained as support seen amid Cotton exports seen hitting 60 lakh bales on competitive rates

CAI has noted that so far about 60 per cent or 36 lakh bales has been shipped since the start of the season

CAI has revised its output projections downward to 358.5 lakh bales, lower by about 1.5 lakh bales from previous estimate.

Cocudakl

Fundamentals

Cocudakl yesterday settled up by 3.97% at 2433 due to demand from animal feeders and weak supply. Considering the rise in binola and supply, the possibility of a fall in the coming days may be less market compelling. However upside seen limited as the market is getting cotton supplies from the Cotton Corporation of India. 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. In Akola spot market, Cocudakl dropped by -4.95 Rupees to end at 2480.95 Rupees per 100 kgs. Technically market is under fresh buying as market has witnessed gain in open interest by 0.5% to settled at 125210 while prices up 93 rupees, now Cocudakl is getting support at 2393 and below same could see a test of 2354 levels, and resistance is now likely to be seen at 2452, a move above could see prices testing 2472.

Trading Idea for the day

Cocudakl trading range for the day is 2354-2472.

Cocudakl prices gained due to demand from animal feeders and weak supply.

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

However upside seen limited as the market is getting cotton supplies from the Cotton Corporation of India.

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