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COTTON

Cotton yesterday settled up by 0.08% at 24740 tracking rise in overseas amid concerns over crop quality after heavy rains lashed major growing regions. The daily arrivals have stopped, as farmers and stockists have less stock. Meanwhile, mill owners and exporters are hoping to restore their supplies for the next twothree months, while the new crop is more than three months away. CAI has reduced the crop size by 4 lakh bales (each of 170 kg) to 356 lakh bales. CAI has increased the consumption estimate for the current crop year by 10 lakh bales to 325 lakh bales from its previous estimate of 315 lakh bales. Cotton exports for 2020-21 is projected to increase by 7 lakh bales to 72 lakh bales based on the input received from exporter-members, CAI. China’s 2020/21 imports are forecast at a 7-year high, driven by the highest projected consumption in 3 years, robust State Reserve (SR) imports, and attractive prices for imported cotton. For 2021/22, the June forecast shows higher trade and consumption with lower production and stocks. A lower consumption outlook for India is more than offset by higher expected demand in China, Bangladesh, and Turkey which is driving higher imports for these countries. In spot market, Cotton dropped by -30 Rupees to end at 24650 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 0.73% to settled at 6870 while prices up 20 rupees, now Cotton is getting support at 24640 and below same could see a test of 24530 levels, and resistance is now likely to be seen at 24820, a move above could see prices testing 24890.

Trading Idea for the day

Cotton trading range for the day is 24530-24890.

Cotton prices seen supported tracking rise in overseas amid concerns over crop quality after heavy rains lashed major growing regions.

The daily arrivals have stopped, as farmers and stockists have less stock.

Meanwhile, mill owners and exporters are hoping to restore their supplies for the next two-three months

COCUDAKL

Cocudakl yesterday settled up by 4.43% at 2873 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. However upside seen limited on profit booking after new restrictions in Maharashtra due to rise in Delta variant of corana virus. 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. In Akola spot market, Cocudakl gained by 17.4 Rupees to end at 2902.4 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -4.89% to settled at 69210 while prices up 122 rupees, now Cocudakl is getting support at 2774 and below same could see a test of 2674 levels, and resistance is now likely to be seen at 2935, a move above could see prices testing 2996.

Trading Idea for the day

Cocudakl trading range for the day is 2674-2996.

Cocudakl gained 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

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

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