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COTTON

Cotton yesterday settled down by -0.47% at 31610 as China will start a new round of sales from its cotton reserves, with a total 600,000 tonnes of imported and domestic cotton to be sold off in daily auctions, according to an official notice. It is the second batch of cotton to be released from reserves this year and is designed to better meet demand for the fibre from spinning companies. However downside seen limited bolstered by strong demand from both the domestic textile sector and export markets over the last year, and high global prices. Both production estimates for the 2021/22 crop year and ending stocks in the U.S. were largely unchanged at 18.20 million bales and 3.40 million bales respectively, the USDA said in its November World Agricultural Supply and Demand Estimates (WASDE) report. India’s cotton production in 2021-22 season is likely to be 360.13 lakh bales of 170 kg each (equivalent to 382.64 lakh running bales of 160 kg each), which is more by 7.13 lakh bales than the previous season’s crop of 353 lakh bales, the Cotton Association of India (CAI) has said in its first estimate for the new season beginning October 1, 2021. In spot market, Cotton dropped by -80 Rupees to end at 32100 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -8.29% to settled at 2279 while prices down -150 rupees, now Cotton is getting support at 31420 and below same could see a test of 31230 levels, and resistance is now likely to be seen at 31970, a move above could see prices testing 32330.

Technical Chart

Trading Range

Cotton trading range for the day is 31230-32330.

Cotton dropped as China will start a new round of sales from its cotton reserves

However downside seen limited amid strong demand from both the domestic textile sector and export markets

China starts new round of cotton sales to boost supply

COCUDAKL

Cocudakl yesterday settled down by -0.8% at 2465 as crop seems to be in good condition after Gujarat received very good rainfall. 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 -13.5 Rupees to end at 2578.15 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 8.18% to settled at while prices down -20 rupees, now Cocudakl is getting support at 2447 and below same could see a test of 2430 levels, and resistance is now likely to be seen at 2488, a move above could see prices testing 2512.

Technical Chart

Trading Range

Cocudakl trading range for the day is 2430-2512.

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

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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