Technically Cotton market is under short covering as market has witnessed drop in open interest by 8.06% to settled at 3329 while prices up 280 rupees.
Now MCX Cotton is getting support at 15890 and below same could see a test of 15750 levels, and resistance is now likely to be seen at 16200, a move above could see prices testing 16370.
Cotton yesterday settled up by 1.78% at 16040 after an alert by the Union agriculture ministry of a possible locust attack in Punjab, in the coming months has sent the cotton and paddy growers into a tizzy.
The Locust Warning Organisation (LWO), a subsidiary of the central ministry, has identified Fazilka district, which shares the boundary with the neighbouring state of Rajasthan as well as Pakistan, as the most vulnerable to attacks by swarms of migratory pests that target vegetation.
The Telangana government’s call to farmers to grow cotton on 70 lakh acres as against the normal area of 40-45 lakh acres came in as a surprise to cotton industry watchers in the State.
Sudden increase in cotton acreage could also lead to severe shortage of seeds. Quality seeds are not something that can be procured in a short span of time. Cotton planting expectations for the 2020/2021 marketing year mirror the prior year’s estimates.
Cotton farmers are projected to plant 13.7 million acres of cotton in 2020/2021, as they did in 2019/2020. USDA anticipates a slight yield bump for the new crop but offsets the production estimate with fewer harvested acres.
While cotton yield is estimated to reach 825 pounds per acre in the 2020/2021 marketing year, up from 823 pounds per acre in 2019/2020, farmers are expected to harvest only 11.35 million acres of cotton in 2020.
--Cotton trading range for the day is 15750-16370.
--Cotton prices gained as locust attack alert leaves Punjab cotton growers worried
--The Telangana government’s call to farmers to grow cotton on 70 lakh acres as against the normal area of 40-45 lakh acres.
--USDA revised the 2019/2020 estimate of domestic use even lower from April’s estimate of 2.9 million 480-pound bales to 2.7 million 480-pound bales in May.
--Corona virus is affecting the global trade and world economies
Courtesy: Kedia Commodities