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COTTON

Cotton yesterday settled up by 0.34% at 23890 as some support seen tracking overseas prices amid concerns over the weather in top growing regions. Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fiber crop in the U.S. Delta region. There are concerns that remain about the size of the U.S. crop in 2021, with how many acres have been planted and on the flip side demand is still good overseas. Falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners and farmers has resulted in supply crunch in the market. For the first time in six years, Punjab’s area under cotton cultivation this kharif season has crossed the 3 lakh hectare mark. This is an increase of 17% over 2020, when cotton was sown on 2.5 lakh hectare. The state, however, is still 41% short of the golden phase in 2011-12 when the area under the traditional cash crop was 5.2 lakh hectare. In 2015, cotton was sown on 3.25 lakh hectares in southern districts. After a devastating period of the worst whitefly attack on cotton that year, farmers turned away from sowing the crop. Before 2014, over 4 lakh hectare was under cotton. In spot market, Cotton gained by 130 Rupees to end at 24240 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -38% to settled at 1907 while prices up 80 rupees, now Cotton is getting support at 23800 and below same could see a test of 23710 levels, and resistance is now likely to be seen at 23950, a move above could see prices testing 24010.

Trading Idea for the day

Cotton trading range for the day is 23710-24010

Cotton prices traded in range as some support seen tracking overseas prices amid concerns over the weather in top growing regions.

Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fiber crop in the U.S. Delta region.

In Punjab, for first time in six years, area under cotton crosses 3 lakh hectare

COCUDAKL

Cocudakl yesterday settled up by 0.03% at 2923 as the tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand. Support seen as falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners and farmers has resulted in supply crunch in the market. The demand and supply balance sheet for cotton is indicative of prices to remain firm in coming months. The USDA in its latest report has pegged global ending stocks in 2021/22 down 1.7 million bales to 89.3 million versus 2020/21. Global consumption estimate for is also higher for 2021/22, up 1.1 million bales year on year. World trade on the other hand is estimated 1.1 million bales higher, considering better import possibilities from China, Bangladesh, and Turkey. The industry remains optimistic demand for Indian cotton products to improve in near term from the global economic rebound. The CAI has kept its consumption estimate for the current crop year at 330 lakh bale in the previous month. Last season's consumption was 250 million bales due to disruptions caused by the Covid-19 epidemic. This indicates that there can be a reduction in the carryover stocks year on year because of increase in the consumption level. Also, the new season for cotton will start only in October – still a long time before the supply availability increases. In Akola spot market, Cocudakl gained by 24.5 Rupees to end at 2977.25 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -0.25% to settled at 76460 while prices up 1 rupees, now Cocudakl is getting support at 2874 and below same could see a test of 2825 levels, and resistance is now likely to be seen at 2973, a move above could see prices testing 3023

Trading Idea for the day

Cocudakl trading range for the day is 2825-3023

Cocudakl prices seen supported as the tight supply situation in cottonseed is expected to continue and the stronger demand.

Support seen as falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners

Also, the new season for cotton will start only in October – still a long time before the supply availability increases.

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