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Cotton

Cotton yesterday settled down by -0.47% at 21170 after Cotton Corporation of India (CCI) reduced the selling price of cotton as a “one-time correction.” 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. According to an estimate by the Cotton Association of India, a body of traders, arrivals 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). Arrivals have been higher despite 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.

In spot market, Cotton gained by 70 Rupees to end at 21890 Rupees. Technically market is under long liquidation as market has witnessed drop in open interest by -16.16% to settled at 3372 while prices down -100 rupees, now Cotton is getting support at 21100 and below same could see a test of 21020 levels, and resistance is now likely to be seen at 21300, a move above could see prices testing 21420.

Trading Idea for the day

* Cotton trading range for the day is 21020-21420.

* Cotton prices dropped after Cotton Corporation of India (CCI) reduced the selling price of cotton as a “one-time correction.”

* Cotton farmers in the country have taken advantage of higher global price resulting in at least 80 per cent of the production being sold till now

* According to an estimate by CAI, arrivals this year since October 1 were 298.89 lakh bales.

Cocudakl

Cocudakl yesterday settled down by -0.17% at 2396 as the market is getting cotton supplies from the Cotton Corporation of India. However downside seen limited 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.

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 2472.8 Rupees per 100 kgs. Technically market is under long liquidation as market has witnessed drop in open interest by -1.57% to settled at 110070 while prices down -4 rupees, now Cocudakl is getting support at 2379 and below same could see a test of 2361 levels, and resistance is now likely to be seen at 2424, a move above could see prices testing 2451.

Trading Idea for the day

* Cocudakl trading range for the day is 2361-2451.

* COCUDAKL dropped as the market is getting cotton supplies from the Cotton Corporation of India.

* However downside seen limited 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.

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