Technically Cotton market is under short covering as market has witnessed drop in open interest by 5.69% to settled at 1891 while prices up 30 rupees.
Now MCX Cotton is getting support at 30290 and below same could see a test of 30030 levels, and resistance is now likely to be seen at 31030, a move above could see prices testing 31510.
Cotton yesterday settled up by 0.1% at 30560 as India’s 2021-22 cotton consumption is forecast at a record 25.5 million bales and exports are projected at the second-highest level in 8 years at 5.8 million.
This level of total use is forecast to lower ending stocks to 12.4 million bales, down nearly 4 million compared with the record level two years prior, according to US Department of Agriculture (USDA).
Cotton stock levels in India nearly doubled to a record two years ago primarily due to two factors. First, production soared 3.0 million bales while consumption fell over 4.0 million.
Second, India’s seed cotton prices fell below the Minimum Support Price (MSP), which drove record state purchases and storage of cotton lint in cotton year (CY) 2020 by the Cotton Corporation of India (CCI).
However, due to record sales the next season, i.e. in 2020-21, CCI’s record stock levels quickly fell. Mills and exporters were eager buyers, with 2020-21 domestic consumption rising 4.0 million bales and exports at their highest in seven years at 6.2 million, the USDA report said.
The USDA also raised global ending stock estimate by 450,000 bales to 87.13 million bales. Meanwhile, the agency lowered China consumption by 1 million bales, citing high prices and energy crisis denting industrial activity. In spot market, Cotton gained by 460 Rupees to end at 29280 Rupees.
--Cotton trading range for the day is 30030-31510.
--Cotton prices gained as India to see record cotton consumption & strong exports in 2021-22
--USDA also raised global ending stock estimate by 450,000 bales to 87.13 million bales.
--USDA lowered China consumption by 1 million bales, citing high prices and energy crisis denting industrial activity.
--In spot market, Cotton gained by 460 Rupees to end at 29280 Rupees.
Courtesy: Kedia Commodities