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Cotton

Cotton yesterday settled down by -2.55% at 29770 as projections for higher global output and ending stocks outweighed reduction in U.S. production in a federal monthly supply and demand report. The USDA also raised global ending stock estimate by 450,000 bales to 87.13 million bales. Meanwhile, the agency lowered China consumption by 1 million bales, citing high prices and energy crisis denting industrial activity. U.S. production in 2021/22 is now forecast at 18 million bales versus 18.51 million bales predicted last month, the USDA said, citing a decline in Texas. The outlook for U.S. ending stocks is now for 3.2 million bales compared with 3.7 million bales last month, the WASDE report showed. The Southern India Mills Association (SIMA) appealed to Prime Minister Narendra Modi to introduce an innovative Cotton Procurement and Trading Scheme for Cotton Corporation of India for price stability. It can be done by providing government funding to procure 10 to 15 per cent of the cotton that arrive in the market during the season and by creating a strategic stock for price stability, selling cotton only to actual users in a staggered manner till the end of the season and maintaining some buffer stock for the next season, SIMA Chairman Ravi Sam said in a statement. In spot market, Cotton gained by 300 Rupees to end at 28860 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -1.48% to settled at 2061 while prices down -780 rupees, now Cotton is getting support at 29420 and below same could see a test of 29070 levels, and resistance is now likely to be seen at 30150, a move above could see prices testing 30530.

Trading Idea for the day

Cotton trading range for the day is 29070-30530.

Cotton dropped as projections for higher global output and ending stocks outweighed reduction in U.S. production.

USDA lowers China consumption by 1 mln bales

The USDA also raised global ending stock estimate by 450,000 bales to 87.13 million bales.

Cocudakl

Cocudakl yesterday settled down by -2.35% at 2498 as crop seems to be in good condition after Gujarat received very good rainfall from last few days. However downside seen limited amid tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand. Cotton production will still be high because of good rains and may touch 350-360 lakh bales despite the area under coverage has gone down by 6-8%, from 133 lakh hectares last year to 125 lakh hectares in the current season. The U.S. Department of Agriculture forecast lower production and also cut ending stocks estimates for the 2021/22 marketing year in a monthly report. In its WASDE report, the USDA projected lower U.S. production, exports and ending stocks compared with July, as well as lower world 2021/22 ending stocks. CAI in its July estimate of the cotton crop for the season 2020-21 beginning October 1, 2020, has reduced the crop estimate by 1.50 lakh bales to 354.50 lakh bales from its previous estimate of 356 lakh bales. The CAI has maintained its cotton crop estimate for the Northern Zone at the same level as in its previous month’s estimate i.e. at 65.50 lakh bales. In Akola spot market, Cocudakl dropped by -11.8 Rupees to end at 2756.2 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 7.73% to settled at while prices down -60 rupees, now Cocudakl is getting support at 2468 and below same could see a test of 2437 levels, and resistance is now likely to be seen at 2547, a move above could see prices testing 2595.

Trading Idea for the day

Cocudakl trading range for the day is 2437-2595.

Cocudakl dropped as crop seems to be in good condition after Gujarat received very good rainfall from last few days.

However downside seen limited amid tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand.

The cotton crop estimate for the Central Zone has been reduced by 0.50 lakh bales to 193.50 lakh bales

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