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Cotton

Cotton yesterday settled up by 0.16% at 30610 as India’s 2021-22 cotton consumption is forecast at a record 25.5 million bales and exports are projected at the second-highest level in 8 years at 5.8 million. This level of total use is forecast to lower ending stocks to 12.4 million bales, down nearly 4 million compared with the record level two years prior, according to US Department of Agriculture (USDA). Cotton stock levels in India nearly doubled to a record two years ago primarily due to two factors. First, production soared 3.0 million bales while consumption fell over 4.0 million. Second, India’s seed cotton prices fell below the Minimum Support Price (MSP), which drove record state purchases and storage of cotton lint in cotton year (CY) 2020 by the Cotton Corporation of India (CCI). However, due to record sales the next season, i.e. in 2020-21, CCI’s record stock levels quickly fell. Mills and exporters were eager buyers, with 2020-21 domestic consumption rising 4.0 million bales and exports at their highest in seven years at 6.2 million, the USDA report said. The USDA also raised global ending stock estimate by 450,000 bales to 87.13 million bales. In spot market, Cotton dropped by -20 Rupees to end at 29560 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -1.96% to settled at 1854 while prices up 50 rupees, now Cotton is getting support at 30240 and below same could see a test of 29880 levels, and resistance is now likely to be seen at 30860, a move above could see prices testing 31120.

Trading Idea for the day

Cotton trading range for the day is 29880-31120.

Cotton gained as India’s 2021-22 cotton consumption is forecast at a record 25.5 million bales

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

USDA lowered China consumption by 1 million bales, citing high prices and energy crisis denting industrial activity.

COCUDAKL

Cocudakl yesterday settled down by -2.42% at 2455 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 -23.65 Rupees to end at 2720 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 14.87% to settled at while prices down -61 rupees, now Cocudakl is getting support at 2422 and below same could see a test of 2390 levels, and resistance is now likely to be seen at 2504, a move above could see prices testing 2554.

Trading Idea for the day

Cocudakl trading range for the day is 2390-2554

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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