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COTTON

Cotton yesterday settled down by -0.36% at 24650 as CAI demand for withdrawal of 10 per cent customs duty on cotton imports. Trade body Cotton Association of India (CAI) has expressed concerns of India losing its competitiveness to China, Pakistan and Bangladesh in the international market. With 10 per cent customs duty on cotton varieties including extra-long staple (ELS), the export-oriented garments and cotton-madeups become costlier thereby giving an edge to the close competitors. The 10 per cent customs duty was imposed on cotton imports on February 2, 2021. The CAI has written a letter to the Union Finance Minister Nirmala Sitharaman seeking the withdrawal of duty. In the letter, Atul Ganatra, President, CAI, said that India produced merely 5-6 lakh bales (each of 170 kg) of ELS variety of cotton as against the local requirement of about 12 to 15 lakh bales of ELS and about 5-7 lakh bales of non ELS contamination-free sustainable cotton. 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. In spot market, Cotton gained by 160 Rupees to end at 24810 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 0.48% to settled at 6903 while prices down -90 rupees, now Cotton is getting support at 24420 and below same could see a test of 24180 levels, and resistance is now likely to be seen at 24990, a move above could see prices testing 25320.

Trading Idea for the day

Cotton trading range for the day is 24180-25320.

Cotton prices seen pressure as CAI writes to FM, points to shortfall in extra-long staple cotton production

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.

The daily arrivals have stopped, as farmers and stockists have less stock.

COCUDAKL

Cocudakl yesterday settled down by -1.11% at 2841 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. In Akola spot market, Cocudakl gained by 20.5 Rupees to end at 2922.9 Rupees per 100 kgs.Technically market is under long liquidation as market has witnessed drop in open interest by -3.7% to settled at 66650 while prices down -32 rupees, now Cocudakl is getting support at 2807 and below same could see a test of 2773 levels, and resistance is now likely to be seen at 2885, a move above could see prices testing 2929.

Trading Idea for the day

Cocudakl trading range for the day is 2773-2929

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

Downside seen limited 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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