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Cotton yesterday settled down by -1.8% at 30470 on profit booking amid prospects of rising production. Higher output from Australia, Brazil, and the United States should offset the fall projected for China and India, according to the International Cotton Advisory Committee (ICAC). Still, production would remain below the level observed before the pandemic and demand is seen strong due to the recovery in the textile industry, specially from top user China. China ramped up imports from the US to make goods and ship them back after last year President Trump banned cotton imports from the Xinjiang Production and Construction Corps saying it uses the forced labor of detained Uighur Muslims. Meanwhile, heavy rains are threatening crops in major US growing regions including Texas and the Mississippi Delta, while a pest called pink bollworm is rapidly spreading across fields. Unseasonal rains in growing areas are proving to be a blessing in disguise as they might help cotton farmers go in for third and fourth picking of their crop this year. India’s cotton production to increase in view of this as higher prices besides a favourable water storage situation will prompt farmers to extend the picking period beyond November-December. In spot market, Cotton gained by 80 Rupees to end at 28560 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -0.05% to settled at 2160 while prices down -560 rupees, now Cotton is getting support at 30180 and below same could see a test of 29900 levels, and resistance is now likely to be seen at 30820, a move above could see prices testing 31180.

Trading Idea for the day

Cotton trading range for the day is 29900-31180

Cotton prices dropped on profit booking amid prospects of rising production.

Higher output from Australia, Brazil, and the United States should offset the fall projected for China and India

Still, production would remain below the level observed before the pandemic and demand is seen strong due to the recovery in the textile industry.

Cocudakl

Cocudakl yesterday settled down by -0.78% at 2535 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 -24.1 Rupees to end at 2768 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 0.47% to settled at 29860 while prices down -20 rupees, now Cocudakl is getting support at 2522 and below same could see a test of 2508 levels, and resistance is now likely to be seen at 2557, a move above could see prices testing 2578.

Trading Idea for the day

Cocudakl trading range for the day is 2508-2578.

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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