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COTTON

Cotton yesterday settled down by -0.73% at 21820 as demand is low due to the second wave of coronavirus and production in textile mills has dropped. Last six months were a good period for Indian spinning mills because there was a huge shortage of cotton yarn due to last year’s lockdown (to tackle Covid and huge demand for yarn came from domestic and international markets. So, spinning mills performed well. The closure of ginning factories across the country has forced cotton growers to wait to sell their produce. Despite the economic slowdown caused by the COVID-19 pandemic, Dhaka has increased its cotton import forecast for marketing year (MY) 2021/22 to 7.6 million bales as a result of higher demand for locally spun yarn. The domestic consumption of cotton in MY 2021/22 is forecasted at 7.9 million bales, which is approximately the same consumption levels as MY 2020/21, due to sustained demand for yarn, fabric, apparel, and garments as the world economies slowly recover from the pandemic. In MY 2021/22, Bangladesh's raw cotton production is forecast to slightly increase over MY 2020/21 to 149,000 bales. The U.S. Department of Agriculture's weekly export sales report showed net sales of 103,100 running bales of cotton for 2020/2021, down 16% from the previous week and 44% from the prior 4-week average. In spot market, Cotton gained by 30 Rupees to end at 22100 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 0.18% to settled at 8886 while prices down -160 rupees, now Cotton is getting support at 21680 and below same could see a test of 21540 levels, and resistance is now likely to be seen at 21990, a move above could see prices testing 22160.

Trading Idea for the day

Cotton trading range for the day is 21540-22160.

Cotton prices dropped as demand is low due to the second wave of coronavirus and production in textile mills has dropped

Despite the economic slowdown caused by the COVID-19 pandemic, Dhaka has increased its cotton import forecast for 2021/22 to 7.6 million bales

USDA’s weekly export sales report showed net sales of 103,100 running bales of cotton for 2020/2021, down 16% from the previous week

Cocudakl

Cocudakl yesterday settled up by 1.59% at 2561 due to a scarcity of cottonseed in spot markets, amid a broad rally in the edible oil complex. A sharp rally in the edible oil complex has also supported prices of cotton wash oil, as there is higher demand for cotton seed for crushing purposes. Waning arrivals of raw cotton due to the fag end of the season and limited stocks of cottonseed with ginners has led to a supply crunch in the market. India has produced around 36 mln bales in the ongoing 2020-21 (Oct-Sep) season, of which nearly 33 mln bales, or 92% of the stock, has already arrived in the market. Considering firm demand outlook for the commodity, the tight supply situation in cottonseed is expected to continue in the coming months as well as the new season for cotton will start only in October. Farmers may increase the area under cotton in the upcoming kharif season due to forecast of a good monsoon by the India Meteorological Department, as well as expectations of higher prices. Cottonseed production and quality were affected last year due to excessive rains in the key producing State of Telangana and some parts of Tamil Nadu. In Akola spot market, Cocudakl gained by 14.9 Rupees to end at 2754.4 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -5.97% to settled at 90170 while prices up 40 rupees, now Cocudakl is getting support at 2531 and below same could see a test of 2502 levels, and resistance is now likely to be seen at 2585, a move above could see prices testing 2610.

Trading Idea for the day

Cocudakl trading range for the day is 2502-2610.

Cocudakl prices gained due to a scarcity of cottonseed in spot markets, amid a broad rally in the edible oil complex.

A sharp rally in the edible oil complex has also supported prices of cotton wash oil, as there is higher demand for cotton seed for crushing purposes

India has produced around 36 mln bales in the ongoing 2020-21 (Oct-Sep) season, of which nearly 92% of the stock, has already arrived in the market.

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