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Cotton

Fundamentals

Cotton yesterday settled up by 0.32% at 22170 as India’s cotton exports are likely to hit 60 lakh bales (each of 170 kg) for the current season (October2020- September 2021) on cost competitiveness. Trade body Cotton Association of India (CAI) has noted that so far about 60 per cent or 36 lakh bales has been shipped since the start of the season. This is primarily due to Indian cotton’s price competitiveness in the international market. Indian cotton quoted at around ₹44,000-45,500 per candy (each of 356 kg of processed cotton) during the past couple of months. At this rate, the Indian exporters could offer a 10-per cent discount to the international prices, which hovered at around 85.60 cents per pound. For the cotton crop, CAI has revised its output projections downward to 358.5 lakh bales, lower by about 1.5 lakh bales from previous estimate. Last year, the output was expected at 360 lakh bales. CAI, in its latest crop outlook for March, stated that India’s cotton imports will be around 12 lakh bales for the year, which is lower by about 2 lakh bales from the earlier estimated about 14 lakh bales for the season. The likely drop is attributed to the recent hike in the import duty on long-staple variety of cotton. Last year, India had imported 15.50 lakh bales of the fibre. As per the CAI data, as on February 28, total 7 lakh bales has already arrived at Indian ports. In spot market, Cotton gained by 30 Rupees to end at 22120 Rupees. Technically market is under short covering as market has witnessed drop in open interest by -0.43% to settled at 6203 while prices up 70 rupees, now Cotton is getting support at 22020 and below same could see a test of 21880 levels, and resistance is now likely to be seen at 22320, a move above could see prices testing 22480.

Trading Idea for the day

Cotton trading range for the day is 21880-22480.

Cotton prices gained as support seen amid Cotton exports seen hitting 60 lakh bales on competitive rates

CAI has noted that so far about 60 per cent or 36 lakh bales has been shipped since the start of the season

CAI has revised its output projections downward to 358.5 lakh bales, lower by about 1.5 lakh bales from previous estimate.

Cocudakl

Fundamentals

Cocudakl yesterday settled down by -0.82% at 2413 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 2484.7 Rupees per 100 kgs. Technically market is under fresh selling as market has witnessed gain in open interest by 0.38% to settled at 125680 while prices down -20 rupees, now Cocudakl is getting support at 2394 and below same could see a test of 2376 levels, and resistance is now likely to be seen at 2443, a move above could see prices testing 2474.

Trading Idea for the day

Cocudakl trading range for the day is 2376-2474

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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