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Cotton

Cotton yesterday settled flat at 36470 as pressure seen amid higher crop size coupled with low demand amidst global economic weakness. India’s cotton output for the season 2022-23 is likely to touch 375 lakh bales (each of 170 kg), given no climatic adversities affect the crop during October, sources said. Cotton area is estimated at 126 lakh hectares till September 2 — up 8-9 per cent from 117 lakh hectares last year. Atul Ganatra, President, Cotton Association of India (CAI), stated that the cotton crop condition in India was "very good and if everything goes well, we are expecting 350 lakh bales +/– 25 lakh bales." The crop size may touch 375 lakh bales if there are no rains during October. If it rains during October, when the cotton bolls are open in the irrigated fields, it may hamper the quality. In its monthly supply-demand report, the United States Department of Agriculture (USDA) cut its global production forecast by 3.1 million bales, and the U.S. output outlook by 3 million bales for the 2022-23 crop year. Hot and dry weather conditions in key growing areas in the United States have threatened the condition of the natural fiber crop and raised supply concerns. In recent time, the heavy rainfalls and pest attacks are affecting the cotton crop. In the northern states of Punjab, Haryana, and Rajasthan cotton crop has been affected due to pink bollworm infestation. In spot market, Cotton dropped by - 960 Rupees to end at 43330 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -0.9% to settled at 661 while prices remain unchanged 0 rupees, now Cotton is getting support at 36280 and below same could see a test of 36080 levels, and resistance is now likely to be seen at 36650, a move above could see prices testing 36820.

Trading Idea for the day

Cotton trading range for the day is 36080-36820.

Cotton seen pressured amid higher crop size coupled with low demand amidst global economic weakness.

India’s cotton output for the season 2022-23 is likely to touch 375 lakh bales

Cotton area is estimated at 126 lakh hectares till September 2 — up 8-9 per cent from 117 lakh hectares last year.

Cocudakl

Cocudakl yesterday settled up by 0.17% at 2344 on some low level recovery after prices dropped due to surging selling pressure at physical market. Stockiest are offloading their stocks in wake of bumper production outlook of cotton. Reports of rising area under cotton and increased availability of green fodder kept cotton seed oil cake prices down. However some support seen last week as available stock is estimated to be very limited, the quality of which is also very weak. Support also seen after reports that there is a forecast of damage due to heavy rains after sowing of cotton in Vidarbha and Khandesh parts of Maharashtra. Sporadic arrivals of new cotton have already started in Haryana and Punjab, while the arrival of new cotton will start in Khandesh at the end of August and in Madhya Pradesh in September. All India Mandi arrivals of Kapas fell by around 82% on M-o-M basis; they were also lower by around 19% on Y-o-Y basis. Gujarat is a major producer of cotton across the country and reports of increase in sowing of cotton by at least 20% in Gujarat are coming. As per CAI, total cotton supply till end of the cotton season 2021-22 is estimated at 402.16 lakh bales of 170 kg each, lower by around 18% as compared to 488 lakh bales last year. Cocudakl’s stock in NCDEX warehouse reduced from 21 lakh sacks to 7.50 lakh sacks. 60 to 70% of Cocudakl’s stock in Gujarat is estimated to be weak quality stock. In Akola spot market, Cocudakl dropped by -84 Rupees to end at 2711.5 Rupees per 100 kgs.Technically market is under fresh buying as market has witnessed gain in open interest by 6.86% to settled at 20720 while prices up 4 rupees, now Cocudakl is getting support at 2316 and below same could see a test of 2289 levels, and resistance is now likely to be seen at 2369, a move above could see prices testing 2395.

Trading Idea for the day

Cocudakl trading range for the day is 2289-2395

Cocudakl gained on some low level recovery after prices dropped due to surging selling pressure at physical market

Stockiest are offloading their stocks in wake of bumper production outlook of cotton.

Weakness in relative feed meal like soymeal and mustard meal will pull the prices down further.

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