Cotton trading range for the day is 32270-33330 - Kedia Advisory
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COTTON
Cotton yesterday settled up by 0.92% at 32960 on expectations of lower demand for garments due to the resurgence of new Omicron coronavirus variant, higher supply, and as higher prices are hurting demand for supplies from top shipper US. Further, demand is muted in top producer India as fabrics manufacturers were hesitant for new purchases due to the proposed hike in taxes from January 1. Meanwhile, the USDA in its December report estimated 2021/22 global production to drop by 200,000 bales as a 1.0 million bale drop in Pakistan more than offsets gains in Benin, Turkey, Uzbekistan, and Cameroon. Also, world cotton ending stocks were projected 1.2 million bales lower due to lower beginning stocks, smaller production and slightly higher consumption. Mali's cotton harvest for the 2021/22 season is expected to be 731,000 tonnes, 10% below an earlier forecast due to insufficient rain in some areas and localised floods elsewhere, data from the cotton producers' association showed. In March, the government forecast that cotton production would rebound this season to 810,000 tonnes after plunging nearly 80% in 2020/21 to 147,200 tonnes because the pandemic upended demand and farmers went on strike. In spot market, Cotton gained by 70 Rupees to end at 32190 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 18.6% to settled at 5419 while prices up 300 rupees, now Cotton is getting support at 32620 and below same could see a test of 32270 levels, and resistance is now likely to be seen at 33150, a move above could see prices testing 33330.
Trading Idea for the day
Cotton trading range for the day is 32270-33330.
Cotton dropped on expectations of lower demand for garments due to the resurgence of new Omicron coronavirus variant, higher supply
Demand is muted as fabrics manufacturers were hesitant for new purchases due to the proposed hike in taxes from January 1.
The USDA in its December report estimated 2021/22 global production to drop by 200,000 bales
COCUDAKL
Cocudakl yesterday settled up by 1.26% at 2889 amid tight supplies owing to higher input costs with rising global demand. However, upside seen limited as the chances of re-emergence of the Covid through the Omicron variant is said to be having a global impact. The global cotton balance sheets for 2021/22 include higher production and consumption, and slightly lower ending stocks. The projected global consumption is up 700,000 bales. The world production forecast is 1.5 million bales higher as gains for Brazil, Australia, Pakistan, and the United States more than offset a 200,000- bale decline in Greece following unusually heavy October rainfall. World ending stocks are projected at 86.9 million bales, 200,000 bales lower than in October, and 2.4 million bales lower than in 2020/21. The broader-based view for cotton is therefore positive from a pricing perspective, which implies that cotton cake prices shall tend to remain in an upward trend in forthcoming weeks. Dairy prices rose at the global auction, surpassing their March peak to touch a fresh seven-year high, as tight milk supply underpins demand for New Zealand’s biggest export commodity. The Global Dairy Trade price index increased 1.4 per cent at the latest auction, to touch its highest level since March 2014. The index has been on a march higher since August. In Akola spot market, Cocudakl gained by 6.5 Rupees to end at 2854.65 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -1.85% to settled at 65710 while prices up 36 rupees, now Cocudakl is getting support at 2840 and below same could see a test of 2791 levels, and resistance is now likely to be seen at 2919, a move above could see prices testing 2949.
Trading Idea for the day
Cocudakl trading range for the day is 2791-2949.
Cocudakl gained amid tight supplies owing to higher input costs with rising global demand.
However, upside seen limited as the chances of re-emergence of the Covid through the Omicron variant is said to be having a global impact.
The U.S. cotton 2021/22 supply and demand forecasts are largely unchanged this month, with only a slight increase in production.
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