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COTTON

Cotton yesterday settled down by -1.86% at 34740 as Indian cotton exports have begun to slide due to traders charging hefty premiums over benchmark U.S. futures on expectations of lower output at a time when there is strong demand from local textile mills, industry officials said. However downside seen limited amid expectations of firm demand, particularly from China and tight supplies. The higher premiums sought by India, the world's biggest cotton producer, could force Asian buyers such as Bangladesh, Vietnam and China to increase purchases from other suppliers such as the United States, Brazil, Australia and African nations. Indian cotton is being offered at around 135 cents per lb, cost and freight-basis, to buyers in Bangladesh for January and February shipment, nearly 20 cents over U.S. futures. Indian mills have exported 1.8 million bales so far in the season and are likely to ship around 1 million bales in January and February. India's cotton production could fall to 34 million bales in 2021/22 marketing year, down nearly 4% from a year ago as crops in key producing states were damaged by rains during the harvesting season. The lower output is reflected in spot markets, with daily trading volumes dropping to around 175,000 bales, whereas 250,000 bales would be more usual at this time of year. In spot market, Cotton dropped by -90 Rupees to end at 35450 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -1.98% to settled at 6035 while prices down -660 rupees, now Cotton is getting support at 34300 and below same could see a test of 33850 levels, and resistance is now likely to be seen at 35500, a move above could see prices testing 36250.

Trading Idea for the day

Cotton trading range for the day is 33850-36250.

Cotton dropped as Indian cotton exports have begun to slide due to traders charging hefty premiums on expectations of lower output

However downside seen limited amid expectations of firm demand, particularly from China and tight supplies.

India's cotton production could fall to 34 million bales in 2021/22 marketing year, down nearly 4% from a year ago

COCUDAKL

Cocudakl yesterday settled down by -1.1% at 3331 as the chances of re-emergence of the Covid through the Omicron variant is said to be having a global impact. However, downside seen limited after rains and hailstorm in few parts of Maharashtra. amid tight supplies owing to higher input costs with rising global demand. 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. In Akola spot market, Cocudakl dropped by -10.55 Rupees to end at 3391.65 Rupees per 100 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 6.5% to settled at 75740 while prices down -37 rupees, now Cocudakl is getting support at 3294 and below same could see a test of 3256 levels, and resistance is now likely to be seen at 3372, a move above could see prices testing 3412.

Trading Idea for the day

Cocudakl trading range for the day is 3256-3412.

Cocudakl dropped as the chances of re-emergence of the Covid through the Omicron variant is said to be having a global impact.

However, downside seen limited after rains and hailstorm in few parts of Maharashtra. amid tight supplies owing to higher input costs with rising global demand.

The global cotton balance sheets for 2021/22 include higher production and consumption, and slightly lower ending stocks.

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