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Cotton

Cotton yesterday settled up by 1.78% at 38360 as support seen after in its latest March report, the US Department of Agriculture (USDA) has scaled down its forecast for global cotton ending stocks in 2021-22 to 82.57 million bales (1 US bale= 218kg), compared to 84.31 million bales projected in February 2022. In the world 2021/22 cotton balance sheet, ending stocks are 1.7 million bales lower than a month earlier. A 300,000-bale decrease in production accounts for some of this change, but most of the decline stems from lower beginning stocks, reflecting updated Indian consumption estimates for 2019/20 and 2020/21 to reflect Indian government sources. Projected world 2021/22 consumption is marginally higher this month, up 111,000 bales, but with a 1-million-bale increase in the 2020/21 global estimate, March’s projected consumption growth rate is lower this month. World consumption is now expected to grow 2.1 percent from a year earlier, below the 2.8 percent rate forecast in February. Support also seen amid low cotton yield this season due to excessive rain and pink bollworm attack has resulted in the crop selling at over 60 per cent higher than the minimum support price (MSP). Production of Cotton is estimated at 34.06 million bales (each of 170 kg) is higher by 1.12 million bales than the average cotton production of 32.95 million bales, as per 2nd Advance Estimates for 2021-22. In spot market, Cotton gained by 20 Rupees to end at 37140 Rupees.Technically market is under short covering as market has witnessed drop in open interest by - 1.03% to settled at 6513 while prices up 670 rupees, now Cotton is getting support at 37800 and below same could see a test of 37250 levels, and resistance is now likely to be seen at 38650, a move above could see prices testing 38950

Trading Idea for the day

Cotton trading range for the day is 37250-38950.

Cotton gains as support seen after USDA revises down 2021-22 global cotton ending stock estimates to 82.57 million bales

In the world 2021/22 cotton balance sheet, ending stocks are 1.7 million bales lower than a month earlier

World consumption is now expected to grow 2.1 percent from a year earlier, below the 2.8 percent rate forecast in February

Cocudakl

Cocudakl yesterday settled down by -0.09% at 3157 on fears of a shortfall in production and higher demand for export. CAI in its latest report has reduced its cotton production by 5.00 lakh bales to 343.13 lakh bales (1 bale of 170 kg) for 2021-22. Consumption also declined by 5 lakh bales to 340 lakh bales, while export and import figures remain unchanged at 15-45 lakh bales respectively. The government has estimated the production of cotton under the second advance estimate for the year 2021-22 at 340 lakh bales as against 362 lakh bales in the first estimate. The USDA in its monthly report has cut India's cotton production to 27.5 million bales from 28 million bales last month, while the US, the largest exporter, cut cotton production by 3.61% to 17.6 million bales. As per estimate, cotton production in Gujarat is expected to be lower in 2021-22 season because of lesser sown area around 22.53 lakh hectares as compared to 25.53 lakh hectares in the previous season. Support also seen amid expectations of firm demand, particularly from China and tight supplies. An urgency in obtaining the supplies and a buyout of cotton futures by hedge funds also supported the cotton market. In Akola spot market, Cocudakl dropped by -1.1 Rupees to end at 3281.55 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 14.07% to settled at 101040 while prices down -3 rupees, now Cocudakl is getting support at 3132 and below same could see a test of 3108 levels, and resistance is now likely to be seen at 3180, a move above could see prices testing 3204.

Trading Idea for the day

Cocudakl trading range for the day is 3108-3204

Cocudakl prices seen supported on fears of a shortfall in production and higher demand for export.

0CAI in its latest report has reduced its cotton production by 5.00 lakh bales to 343.13 lakh bales for 2021-22.

The USDA in its monthly report has cut India's cotton production to 27.5 million bales from 28 million bales last month

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