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COTTON

Cotton yesterday settled up by 1.1% at 22050 tracking rise in ICE cotton prices rose to their highest since early March on persistent worries that unfavorable weather in key growing regions may hurt the natural fiber crop. The main reason is the weather, particularly in the Southern plains. Demand is better than what the World Agricultural Supply and Demand Estimates are saying. The U.S. Department of Agriculture's weekly export sales report showed net sales of 103,100 running bales for 2020/2021, down 16% from the previous week and 44% from the prior 4-week average. Support also seen as CAI estimated cotton exports to increase by 20% to 60 lakh bales in the 2020-21 season that begins in October, mainly due to higher international prices. CAI increases the production estimate to 360 lakh bales on higher output in North India. The second wave of Covid-19 is taking its toll on Gujarat’s textile industry which saw at least 25% decline in fabric production in the past 15-20 days. Since the beginning of April, production of fabric has gone down in the state from around 5.50 crore metres to almost 4 crore metres per day. Demand from textile traders has gone down drastically. If the situation doesn’t improve in next fortnight period, production of fabric would further plummet to as low as 50%. In spot market, Cotton gained by 90 Rupees to end at 22050 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 5.81% to settled at 8828 while prices up 240 rupees, now Cotton is getting support at 21790 and below same could see a test of 21540 levels, and resistance is now likely to be seen at 22260, a move above could see prices testing 22480.

Trading Idea for the day

Cotton trading range for the day is 21540-22480

Cotton gains tracking rise in ICE cotton prices on persistent worries that unfavorable weather may hurt the natural fiber crop.

CAI estimated cotton exports to increase by 20% to 60 lakh bales in the 2020-21 season that begins in October

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

Cocudakl

Cocudakl yesterday settled up by 1.12% at 2628 on short covering as the global 2020-21 cotton supply and demand estimates shows lower stocks and production. However upside seen limited amid worries of lockdown it is anticipated that there will be slow supply and same with demand. In recent session prices as supply of cottonseeds might become tight in the coming kharif season if farmers decide to expand the area under the fibre crop going by the high price that prevailed during the current season to September. 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. Due to continuous rains last year, there was lot of damage to seed production in Telangana and Tamil Nadu. Cotton sowing area in the State is expected to increase further in 2021-22 kharif in the backdrop of increase of cotton price in the open market during this season. Cotton price touched Rs 6,500 per quintal in the open market, while the Cotton Corporation of India (CCI) fixed the MSP of Rs 5,550 per quintal. At present, farmers in the State are sowing cotton in 15-lakh acres. In Akola spot market, Cocudakl dropped by -7.5 Rupees to end at 2787.5 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -2.55% to settled at 99760 while prices up 29 rupees, now Cocudakl is getting support at 2572 and below same could see a test of 2516 levels, and resistance is now likely to be seen at 2665, a move above could see prices testing 2702

Trading Idea for the day

Cocudakl trading range for the day is 2516-2702.

Cocudakl prices gained on short covering as the global 2020-21 cotton supply and demand estimates shows lower stocks and production.

However upside seen limited amid worries of lockdown it is anticipated that there will be slow supply and same with demand. In

CCI is in favour of increasing cotton sowing area in the State and making necessary arrangements to supply seeds and fertilisers to farmers.

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