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Cotton prices, symbolically referred to as Cottoncandy, settled down by -0.14% at 55620, reflecting the impact of Brazil's historic high cotton production in the 2022-23 season. The increased cultivation and productivity in Brazil contributed to a surge in global cotton supply. However, sluggish demand, influenced by unfavorable economic conditions, resulted in bloated inventories and a decline in cotton prices worldwide. The Cotton Association of India (CAI) has maintained its pressing estimate for the 2023-24 season at 294.10 lakh bales of 170 kg each. Despite the rise in global supply, CAI emphasizes the impact of sluggish demand on inventories. CAI President Atul S Ganatra highlighted that total supply till the end of November was estimated at 92.05 lakh bales, consisting of market arrivals, imports, and opening stocks. This information underscores the existing challenges in balancing cotton supply and demand. Reports of a decline in pink bollworm infestation in the cotton crop bring a positive aspect to the market. The infestation has reduced from 30.62% during 2017-18 to 10.80% in 2022-23, contributing to better crop conditions. However, the market is still grappling with the aftermath of oversupply and weakened demand. Brazil's cotton shipments reaching 253.71 thousand tons in November, with a 12% increase compared to October 2023, indicate the country's significant role in the global cotton market. However, a 5.5% decrease compared to November 2022 suggests the challenges faced by the global cotton industry. The International Cotton Advisory Committee (ICAC) projects that global cotton production will surpass consumption for the second consecutive year. With an expected 3.25% year-on-year growth in cotton lint production to 25.4 million metric tons in the 2023-2024 season, consumption is forecasted to marginally decline to 23.4 million metric tons. From a technical standpoint, the market is witnessing long liquidation, marked by a 0.5% drop in open interest to settle at 199. Cottoncandy is finding support at 55520, with a potential test of 55430 on the downside. Resistance is anticipated at 55700, and a breakthrough could lead to further testing at 55790.

COTTONCANDY

BUY COTTONCANDY JAN @ 55500 SL 55300 TGT 55800-56000. MCX

COCUDAKL

SELL COCUDAKL FEB @ 2750 SL 2800 TGT 2700-2660. NCDEX

KAPAS

BUY KAPAS APR @ 1525 SL 1510 TGT 1550-1560. NCDEX