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MCX COTTON

Cotton yesterday settled up by 0.14% at 21410 as China could import more cotton to replace fiber from Xinjiang that’s being rejected by some Western companies and threatens to hurt its booming textile export industry. India has been able to export good quality cotton this year to Bangladesh, China, among other nations. During the cotton season of 2020-21, CCI has procured 92 lakh bales under MSP operations.

For the last six weeks, cotton prices have been ruling much above MSP, and currently they are 15-20% above MSP. Therefore, the intervention of the agency has not been required after mid-February. So, farmers are getting Rs 6,400 to Rs 6,500 per quintal as against the MSP of Rs 5,825 per quintal. Initially, it was expected by the trade and market sources that CCI may be required to buy at least 1.5 crore bales but since the farmers are getting good price from the market forces itself, MSP intervention is not required now.

The Economic Coordination Committee (ECC) of the Cabinet is to allow import of cotton and yarn through land route (including India) aimed at ensuring provision of raw material to the value-added sector at cheaper rates. In spot market, Cotton gained by 150 Rupees to end at 21580 Rupees.

Technically market is under short covering as market has witnessed drop in open interest by -1.88% to settled at 7796 while prices up 30 rupees, now Cotton is getting support at 21250 and below same could see a test of 21080 levels, and resistance is now likely to be seen at 21560, a move above could see prices testing 21700.

Trading Idea for the day

* Cotton trading range for the day is 21100-21800. 

* Cotton prices settled flat as China may boost cotton imports to cut Xinjiang fiber in exports

* During the cotton season of 2020-21, CCI has procured 92 lakh bales under MSP operations.

* ECC to allow import of cotton, yarn from India

Cocudakl

Cocudakl yesterday settled up by 1.27% at 2396 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.

However upside seen limited as the market is getting cotton supplies from the Cotton Corporation of India. 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 -9.55 Rupees to end at 2465 Rupees per 100 kgs. Technically market is under short covering as market has witnessed drop in open interest by -13.74% to settled at 84330 while prices up 30 rupees, now Cocudakl is getting support at 2380 and below same could see a test of 2364 levels, and resistance is now likely to be seen at 2411, a move above could see prices testing 2426.

Trading Idea for the day

* Cocudakl trading range for the day is 2361-2413.

* Cocudakl prices dropped on profit booking after prices remained supported 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.

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