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India is the world’s 2nd largest cotton exporter and exported 128.81 lac bales in cotton season 2011-12 crop year.

10 Jan 2013

NEW DELHI(Commodity Online): Indian’s cotton futures are expected to remain bearish on high production and fall in exports. According to Cotton Association of India (CAI), India’s cotton output for 2012-13 season is likely to be about 35.5 million bales of 170 kg each.

“Overall trend for India's cotton on MCX is looking negative for January contract until it breaks Rs.16720 level. Support is seen near Rs.16200 levels while Rs.16720 is the resistance. Trading in futures below Rs.16200, it would witness downside up to Rs.15700 levels,” said Milan Shah, Research Analyst at Commodity Online.

Cotton in MCX January contract was seen trading at Rs.16360, a fall of 0.43% at 12.05 PM IST on Thursday.

“Higher output expectations by Cotton Association of India have turned the sentiments negative for the cotton prices. However, downside may be limited as farmers may not sell their stocks at lower prices,” said Angel Commodities in an outlook.

The consumption of cotton worldwide is rising by 760,000 tons to 23.5 million tons and the world production of cotton is dropping by 1.5 million tons to 26 million tons. Even though the production remains 10 percent above consumption.

So the prices may remain bearish and the exports are expected to fall.

India's cotton consumption is estimated to be about 26.5 million bales, which would result in a sizeable surplus in the country. The higher output expectation has turned prices lower in the the markets.

In the marketing year ending July India's cotton exports are likely to tumble by 60 per cent to 5.7 million bales compared to last year level, according to U.S. Department of Agriculture (USDA) .

The global cotton consumption is expected to rise 3 percent from last season’s 8-year low as the global economy experiences a slow recovery, according to USDA cotton forecast for 2012/13.

During the current season, the ratio of world ending stocks to use is rising to an estimated 0.70, the highest since the end of the World War II ,says International Cotton Advisory Committee (ICAC) in its monthly analysis of global cotton scenario . So the prices might be expected to be at record lows.

India is the world’s 2nd largest cotton exporter and exported 128.81 lac bales in cotton season 2011-12 crop year.


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