Technically Cotton market is under long liquidation as market has witnessed drop in open interest by 4.81% to settled at 3677 while prices down 170 rupees.
Now MCX Cotton is getting support at 15830 and below same could see a test of 15730 levels, and resistance is now likely to be seen at 16080, a move above could see prices testing 16230.
Cotton yesterday settled down by 1.06% at 15920 as the epidemic hit consumer demand and forced clothing shops to close.
However downside seen limited as USDA reduced its projection for global production and ending stocks for the 2020/21 crop year.
The United States Department of Agriculture (USDA) in its latest World Agriculture Supply and Demand Estimates (WASDE) report cut its global production estimate to 116.25 million bales from 118.74 projected in June. U.S. ending stocks are forecast at 6.8 million bales, 1.2 million lower than in June and production estimate slashed by 2-million bales, as per the monthly report.
Cotton output in Mali is expected to shrink more than 40% year-on-year to 400,000 tonnes in the 2020/21 season after farmers avoided growing the crop due to a coronavirus-linked price slump, the cotton producers' confederation said.
Mali is one of the four top cotton producers in sub-Saharan Africa, alongside Chad, Benin and Burkina Faso. Output for 2020/21 was initially forecast at 820,000 tonnes versus 700,000 tonnes last season.
But farmers planted less than expected after the producer price was cut to 200 CFA francs ($0.35) per kg from 275 CFA last season, while fertiliser costs soared.The weekly export sales data from the USDA showed net sales for 2019/20 were down 35% from the previous week, while exports were up 19% for the period ending July 2.
--Cotton trading range for the day is 15730-16230.
--Cotton dropped as the epidemic hit consumer demand and forced clothing shops to close.
--WASDE cut its global production estimate to 116.25 million bales from 118.74 projected in June.
--Cotton output in Mali is expected to shrink more than 40% year-on-year to 400,000 tonnes in the 2020/21 season
--In spot market, Cotton dropped by 50 Rupees to end at 15860 Rupees.
Courtesy: Kedia Commodities