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Cotton

Cotton yesterday settled down by -0.9% at 29650 as India is likely to produce 34.4 million bales of cotton in the 2022/23 season that started on Oct. 1, up 12% from a year ago after farmers expanded the crop area. India’s cotton output for the season ended September 30, 2022, fell to 307.5 lakh bales (against 360.13 lakh bales estimated at the beginning of the season in October last year. This is the lowest since 2007-08, when the production was 307 lakh bales. WASDE report said world trade is projected to be nearly 1 million bales lower from September, with declines in imports by China, Pakistan, Mexico, Turkey and Vietnam. The agency lowered its U.S. exports forecast by 100,000 bales to 12.5 million bales, while also cutting export estimates for Australia, Brazil, India, Benin, Cote d’Ivoire, Greece and Mexico. "In the 2022/23 world balance sheet this month, consumption is 3.0 million bales lower and ending stocks are 3.1 million bales higher," the USDA said. USDA said its estimates for 2022/23 U.S. cotton crop ending stocks are 100,000 bales higher from a year earlier, with production nearly unchanged at 13.8 million bales. In Gujarat, new cotton arrival increased, and daily arrival reached 6,000 bales of 170 kg. Ginning mills have started buying seed cotton with the advent of the auspicious festival of Navratri. However, spinning mills are cautious as they expect a downward trend in cotton prices during peak arrival. In spot market, Cotton dropped by -210 Rupees to end at 32980 Rupees.Technically market is under fresh selling as the market has witnessed a gain in open interest by 0.76% to settle at 2108 while prices are down -270 rupees, now Cotton is getting support at 29420 and below same could see a test of 29190 levels, and resistance is now likely to be seen at 29940, a move above could see prices testing 30230.

Trading Idea for the day

Cotton trading range for the day is 29190-30230.

Cotton dropped as India’s cotton output seen rising 12% on bigger crop area

However downside seen limited as crops remain threatened due to adverse weather conditions and pest attacks in major growing regions.

USDA projected higher year-end stocks and a decline in exports amid a slowdown in consumption.

Cocudakl

Cocudakl yesterday settled down by -1.62% at 2435 as stockiest are offloading their stocks in wake of bumper production outlook of cotton. Reports of rising area under cotton and increased availability of green fodder kept cotton seed oil cake prices down. However some support seen last week as available stock is estimated to be very limited, the quality of which is also very weak. Support also seen after reports that there is a forecast of damage due to heavy rains after sowing of cotton in Vidarbha and Khandesh parts of Maharashtra. Sporadic arrivals of new cotton have already started in Haryana and Punjab, while the arrival of new cotton will start in Khandesh at the end of August and in Madhya Pradesh in September. All India Mandi arrivals of Kapas fell by around 82% on Mo-M basis; they were also lower by around 19% on Y-o-Y basis. Gujarat is a major producer of cotton across the country and reports of increase in sowing of cotton by at least 20% in Gujarat are coming. As per CAI, total cotton supply till end of the cotton season 2021-22 is estimated at 402.16 lakh bales of 170 kg each, lower by around 18% as compared to 488 lakh bales last year. Cocudakl’s stock in NCDEX warehouse reduced from 21 lakh sacks to 7.50 lakh sacks. 60 to 70% of Cocudakl’s stock in Gujarat is estimated to be weak quality stock. In Akola spot market, Cocudakl dropped by -15.15 Rupees to end at 2680.55 Rupees per 100 kgs.Technically market is under long liquidation as the market has witnessed a drop in open interest by -0.67% to settle at 41380 while prices are down -40 rupees, now Cocudakl is getting support at 2385 and below same could see a test of 2335 levels, and resistance is now likely to be seen at 2482, a move above could see prices testing 2529.

Trading Idea for the day

Cocudakl trading range for the day is 2335-2529.

Cocudakl prices seen pressure as stockiest are offloading their stocks in wake of bumper production outlook of cotton.

Some support seen last week as available stock is estimated to be very limited, the quality of which is also very weak.

Farmers in Pakistan stranded by unprecedented floods are running low on feed for their cattle.

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