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Cotton

Cotton yesterday settled up by 3.46% at 33790 amid low production, rising demand and supply constraints. Currently, raw cotton prices in various markets across the country are ruling above ₹7,000 a quintal against the MSP of ₹5,726 fixed for this year. Prices much above MSP means the CCI will not need to do any market intervention this year. Prices are moving up since the cotton balance sheet is tight and ending stocks are lower. Except China, no other country seems to have ample stocks. Cotton exports could be lower at 50 lakh bales this season (October 2021-September 2022) compared with 75-80 lakh bales last season. SIMA said the Committee on Cotton Production and Consumption (CCPC) had pegged the carryover stocks at 120 lakh bales and if additional 10-15 lakh bales of cotton would have been consumed or exported, ending stocks could be 105 lakh bales. SIMA said cotton production this year is estimated to be 360 lakh bales (170 kg) and if the carryover stocks are pegged at 100 lakh bales and imports at 10 lakh bales, the industry would have a total supply of 470 lakh bales. According to estimates of CAI, a trade body, the carryover stocks are estimated at 82.50 lakh bales. In spot market, Cotton gained by 710 Rupees to end at 32210 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -1.75% to settled at 3372 while prices up 1130 rupees, now Cotton is getting support at 33190 and below same could see a test of 32590 levels, and resistance is now likely to be seen at 34110, a move above could see prices testing 34430.

Technical Chart

Trading Range

Cotton trading range for the day is 32590-34430.

Cotton prices remained supported amid low production, rising demand and supply constraints.

Projections of tight supplies later this season leave industry worried

Indian cotton exports will be reduced by 35 per cent from 78 lakh bales (last year) to around 45-50 lakh bales this year

Cocudakl

Cocudakl yesterday settled up by 0.54% at 2628 amid tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand. However upside seen limited as crop seems to be in good condition after Gujarat received very good rainfall. 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 -2.45 Rupees to end at 2786.45 Rupees per 100 kgs.Technically market is under fresh buying as market has witnessed gain in open interest by 0.1% to settled at while prices up 14 rupees, now Cocudakl is getting support at 2583 and below same could see a test of 2539 levels, and resistance is now likely to be seen at 2673, a move above could see prices testing 2719.

Technical Chart

Trading Range 

Cocudakl trading range for the day is 2539-2719.

Cocudakl gained amid tight supply situation in cottonseed is expected to continue in the coming months considering the stronger demand.

However upside seen limited as crop seems to be in good condition after Gujarat received very good rainfall.

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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