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Cotton

MCX Cotton Futures traded sideways during the month of August so far due to higher demand from the textile industries in the domestic market and later higher supplies in the Gujarat & Maharashtra spot markets due to easing lockdown. Spot prices have not shown any major movement, because of monsoon recoveries led to pick up of sowing in various states. Cotton sowing is progressing across India for the coming 2021-22 season. Till 13th August 2021, cotton sowing across India has reached 116.17 lakh hectares compared to previous season sowing at 116.38 lakh hectares during the same time. Indian physical market remained stable so far. By 19th August, MCX Cotton futures price closed at Rs.26380/bale, higher by 0.57% compared to Rs.26230/bale reported on 2nd August.

Fundamentally for the month ahead, we expect MCX Cotton futures to trade bullish as the global cotton production and stocks has shown decline on a monthly basis, based on recent USDA report. Global Cotton stock for the 2021-22, has been revised lower by 50,000 bales ( 1 bale = 170 kgs). In the other estimates for 2021-22, as largely offsetting changes in production and consumption do little to offset lower estimated beginning stocks. Exports are 200,000 bales lower than in July, and ending stocks are 300,000 bales lower, equating to 17% of expected use, the same as in 2020/21. Lower production is reducing this month’s 2021-22 global ending stocks forecast slightly. World production is forecast 546,000 bales lower as reduced production in Brazil, the United States, and Uzbekistan offsets higher projections for Australia, Mali, and Tanzania. Consumption is forecast slightly higher, up 170,000 bales, with gains for Bangladesh and Pakistan. World 2021-22 cotton ending stocks are projected at 87.2 million bales, about 500,000 bales lower than in July, and 4.6 million lower than in 2020-21.

On a weekly chart, MCX Cotton (Oct) future has been rising continuously in a bullish channel with Higher Highs and Higher Lows formation from the last couple of weeks. However, the price has faced immediate hurdle of upper Bollinger Band with negative crossover of Stochastic RSI, which indicate some correction in the counter form the higher levels. In addition, the price has reversed from upper trend line of channel, which also supporting bearish momentum. Hence, based on the above technical structure we are expecting bearish movement for the month ahead. On the downside, it may find the support around 24700 while upside resistance is intact at 27050.

Coriander seed

NCDEX Coriander Future price had traded higher during the month of August, owing to steady arrivals in the domestic market with APMC mandis being open on all most all days. This has improved the demand for Coriander seed was witnessed in the APMC markets in Madhya Pradesh, Rajasthan and Gujarat as the retail sectors continue to remain partially shut. Moreover, the demand in the pharmacy sector was steady, while exports has improved significantly in past couple of weeks with easing lockdown situation in Europe and United States. By 18th August, NCDEX Coriander Future price closed at Rs.7772/quintal, higher by 12.05% compared Rs.6936/quintal reported on 31stJuly.

Fundamentally for the month ahead, we are expecting NCDEX Coriander futures to witness bullish trend as the export demand from India is expected to be seasonally higher. Moreover, the domestic demand is expected to higher as the restaurant business has reopened in India. Millers and masala makers have picked up their pace of buying as they forecast lower ending stocks before the beginning of the sowing season in October month onwards. This year, we haven't seen much rise in imports from Russia and Bulgaria to India; especially during the month of July which can support prices as well. Though the ending stocks is slowly declining in the major APMC markets of Kota, Ramganj, Rajkot and Guna in the above states, but then, the supplies are likely to continue to remain steady for the festive season as stockists and farmers had been holding back during India’s second wave period of March and April 2021.

On a weekly time frame, NCDEX Dhaniya (Sept) future has given breakout of rectangle channel with large engulfing candlesticks, which point out positive trend for near future. In addition, the price has also settled above the upper Bollinger Band formation with positive crossover of MACD, which is again an upside confirmation. Moreover, the price has also been trading above the 50 Exponential Moving Averages, which is also supporting the upward trend. Furthermore, amomentum indicator RSI (14) reading is above 60 levels, which suggest bullish move for the near term. Hence, based on above technical structure one can initiate a long position in NCDEX Dhaniya (sep) future at CMP 7870 or a fall in the price till 7750 levels can be used as buying opportunity for the upside target of 8600 . However, the bullish view will be negated if NCDEX Dhaniya (Sep) future close below the support level of 7490.

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