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Cotton

Cotton yesterday settled up by 1.11% at 39210 as cotton production at 340.63 lakh bales for this season (October 2021-September 2022) against 352.48 lakh bales last season, as per second advance estimate, the Union Ministry for Agriculture and Farmers WelfareLast month, the Cotton Association of India (CAI), a body of traders, cut its crop estimates to 343.13 lakh bales from its earlier projection of 348.13 lakh bales. The US Department of Agriculture (USDA) has pegged India’s cotton production at 339.38 lakh bales, accounting for 22 per cent of the global production. The USDA said though the area under cotton had dropped to a five-year low of 124 lakh hectares, a higher yield of 465 kg/ha had helped bridge the gap a bit. Currently, cotton imports attract a five per cent basic customs duty and five per cent agriculture infrastructure cess. The textiles industry has been urging the Government to scrap the import duty, particularly after cotton prices skyrocketed this season. Arrival of cotton has dropped to 75,000 bales (170 kg each) across the country, but what is of concern is that there is a huge variation in the quality of the cotton coming to the markets. The USDA said cotton consumption is projected at 332 lakh bales, including small scale units, a record as the textiles industry has expanded. In spot market, Cotton dropped by -30 Rupees to end at 38100 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -0.91% to settled at 4884 while prices up 430 rupees, now Cotton is getting support at 38880 and below same could see a test of 38540 levels, and resistance is now likely to be seen at 39420, a move above could see prices testing 39620.

Trading Idea for the day

Cotton trading range for the day is 38540-39620.

Cotton prices gains as cotton production at 340.63 lakh bales for this season against 352.48 lakh bales last season

Arrival of cotton has dropped to 75,000 bales (170 kg each) across the country

The USDA said cotton consumption is projected at 332 lakh bales

Cocudakl

Cocudakl yesterday settled up by 1.59% at 3129 on fears of a shortfall in production and higher demand for export. CAI in its latest report has reduced its cotton production by 5.00 lakh bales to 343.13 lakh bales (1 bale of 170 kg) for 2021-22. Consumption also declined by 5 lakh bales to 340 lakh bales, while export and import figures remain unchanged at 15-45 lakh bales respectively. The government has estimated the production of cotton under the second advance estimate for the year 2021-22 at 340 lakh bales as against 362 lakh bales in the first estimate. The USDA in its monthly report has cut India's cotton production to 27.5 million bales from 28 million bales last month, while the US, the largest exporter, cut cotton production by 3.61% to 17.6 million bales. As per estimate, cotton production in Gujarat is expected to be lower in 2021-22 season because of lesser sown area around 22.53 lakh hectares as compared to 25.53 lakh hectares in the previous season. Support also seen amid expectations of firm demand, particularly from China and tight supplies. An urgency in obtaining the supplies and a buyout of cotton futures by hedge funds also supported the cotton market. In Akola spot market, Cocudakl dropped by -5.85 Rupees to end at 3244.45 Rupees per 100 kgs.Technically market is under short covering as market has witnessed drop in open interest by -3.31% to settled at 105230 while prices up 49 rupees, now Cocudakl is getting support at 3086 and below same could see a test of 3042 levels, and resistance is now likely to be seen at 3155, a move above could see prices testing 3180.

Trading Idea for the day

Cocudakl trading range for the day is 3042-3180.

Cocudakl prices seen supported on fears of a shortfall in production and higher demand for export.

CAI in its latest report has reduced its cotton production by 5.00 lakh bales to 343.13 lakh bales for 2021-22.

The USDA in its monthly report has cut India's cotton production to 27.5 million bales from 28 million bales last month

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