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Cotton

Cotton yesterday settled down by -0.54% at 22190 on profit booking after prices gained bolstered by hopes for stronger demand as the global economy recovers. International Cotton Advisory Committee, has stated that the global production of cotton is expected to decrease to 251 lakh tonnes in the year 2020- 21. Despite increasing stock of cotton and reduced production, recovery due to corona pandemic is expected to be limited. However, the ICAC has estimated that the consumption of cotton will increase by 7 per cent to 243 lakh tonnes in the year 2020-21. Meanwhile, there have also been some positive signs that capering mills in Vietnam, Bangladesh and India were operating at 75 per cent of their capacity in July, while the current stock-to-use ratio is 97, which the current availability of cotton is capable of meeting. According to the International Cotton Advisory Committee, the consumption of cotton is expected to be 243 lakh tonnes in the year 2020-21, while the production is expected to be 251 lakh tonnes. In the year 2019-20, consumption of cotton was 227 lakh tonnes and production was 262 lakh tonnes. Speculators boosted their already large position in cotton by adding 4,546 contracts in the week to Feb. 23 bringing the total net long contracts to 74,226, data from the U.S. Commodity Futures Trading Commission showed. In spot market, Cotton gained by 30 Rupees to end at 22160 Rupees. Technically market is under long liquidation as market has witnessed drop in open interest by -1.56% to settled at 8750 while prices down - 120 rupees, now Cotton is getting support at 22100 and below same could see a test of 22010 levels, and resistance is now likely to be seen at 22340, a move above could see prices testing 22490

Trading Idea for the day

* Cotton trading range for the day is 22010-22490.

* Cotton dropped on profit booking after prices gained bolstered by hopes for stronger demand as the global economy recovers.

* International Cotton Advisory Committee, has stated that the global production of cotton is expected to decrease to 251 lakh tonnes in the year 2020-21.

* Despite increasing stock of cotton and reduced production, recovery due to corona pandemic is expected to be limited.

Cocudakl

Cocudakl yesterday settled up by 1.83% at 2277 as stock levels are forecast to be down 1% on last year. Global cotton stock levels are expected to drop to 21.1m tonnes by the end of 2020/21 as consumption is set to outpace production. The cotton consumption forecast has been revised upward this month from 24.2m tonnes to 24.5m tonnes, and while the projected 7% year-overyear increase is not nearly enough to offset the losses caused by the Covid-19 pandemic, it is expected to outpace production, thus drawing stocks down by the end of the season. According to the latest update from the International Cotton Advisory Committee (ICAC), stock levels are forecast to be down 1% on last year. Meanwhile, the Secretariat is projecting an increase in global trade. Both China and Pakistan are forecast to increase imports, the former benefitting from the price gap between domestic and foreign cotton and the latter due to a decrease in domestic production. The ICAC is an association of cotton producing, consuming and trading countries. It helps member countries maintain a healthy world cotton economy, provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production, and serves as a forum for discussing cotton issues of international significance. In Akola spot market, Cocudakl dropped by -4.95 Rupees to end at 2370 Rupees per 100 kgs. Technically market is under short covering as market has witnessed drop in open interest by -9.18% to settled at 83760 while prices up 41 rupees, now Cocudakl is getting support at 2244 and below same could see a test of 2211 levels, and resistance is now likely to be seen at 2302, a move above could see prices testing 2327.

Trading Idea for the day

Cocudakl trading range for the day is 2211-232

Cocudakl prices gained as stock levels are forecast to be down 1% on last year.

The cotton consumption forecast has been revised upward this month from 24.2m tonnes to 24.5m tonnes.

Global cotton stock levels are expected to drop to 21.1m tonnes by the end of 2020/21 as consumption is set to outpace production.

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