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COTTON

Cotton yesterday settled up by 0.37% at 24720 tracking rise in ICE cotton futures boosted by a weaker dollar and concerns over crop quality after heavy rains lashed major growing regions. Support also seen as the daily arrivals have stopped, as farmers and stockists have less stock. Meanwhile, mill owners and exporters are hoping to restore their supplies for the next two-three months, while the new crop is more than three months away. CAI has reduced the crop size by 4 lakh bales (each of 170 kg) to 356 lakh bales. CAI has increased the consumption estimate for the current crop year by 10 lakh bales to 325 lakh bales from its previous estimate of 315 lakh bales. Cotton exports for 2020-21 is projected to increase by 7 lakh bales to 72 lakh bales based on the input received from exporter-members, CAI. China’s 2020/21 imports are forecast at a 7-year high, driven by the highest projected consumption in 3 years, robust State Reserve (SR) imports, and attractive prices for imported cotton. For 2021/22, the June forecast shows higher trade and consumption with lower production and stocks. A lower consumption outlook for India is more than offset by higher expected demand in China, Bangladesh, and Turkey which is driving higher imports for these countries. In spot market, Cotton gained by 90 Rupees to end at 24680 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -0.01% to settled at 6820 while prices up 90 rupees, now Cotton is getting support at 24570 and below same could see a test of 24410 levels, and resistance is now likely to be seen at 24840, a move above could see prices testing 24950.

Trading Idea for the day

Cotton trading range for the day is 24410-24950

Cotton gains tracking rise in ICE cotton futures boosted by a weaker dollar and concerns over crop quality after heavy rains lashed major growing regions.

Support also seen as the daily arrivals have stopped, as farmers and stockists have less stock.

Meanwhile, mill owners and exporters are hoping to restore their supplies for the next two-three months

COCUDAKL

Cocudakl yesterday settled down by -1.5% at 2751 on profit booking after new restrictions in Maharashtra due to rise in Delta variant of corana virus. However downside seen limited as the tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand. Support seen as falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners and farmers has resulted in supply crunch in the market. The demand and supply balance sheet for cotton is indicative of prices to remain firm in coming months. The USDA in its latest report has pegged global ending stocks in 2021/22 down 1.7 million bales to 89.3 million versus 2020/21. Global consumption estimate for is also higher for 2021/22, up 1.1 million bales year on year. World trade on the other hand is estimated 1.1 million bales higher, considering better import possibilities from China, Bangladesh, and Turkey. The industry remains optimistic demand for Indian cotton products to improve in near term from the global economic rebound. The CAI has kept its consumption estimate for the current crop year at 330 lakh bale in the previous month. Last season's consumption was 250 million bales due to disruptions caused by the Covid-19 epidemic. This indicates that there can be a reduction in the carryover stocks year on year because of increase in the consumption level. Also, the new season for cotton will start only in October – still a long time before the supply availability increases. In Akola spot market, Cocudakl dropped by -50.95 Rupees to end at 2885 Rupees per 100 kgs.Technically market is under long liquidation as market has witnessed drop in open interest by -5.81% to settled at 72770 while prices down -42 rupees, now Cocudakl is getting support at 2701 and below same could see a test of 2652 levels, and resistance is now likely to be seen at 2804, a move above could see prices testing 2858.

Trading Idea for the day

Cocudakl trading range for the day is 2652-2858.

Cocudakl dropped on profit booking after new restrictions uncertainity in Maharashtra due to rise in Delta variant of corana virus.

Support seen as falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners

Also, the new season for cotton will start only in October – still a long time before the supply availability increases

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