Technically Cotton market is under short covering as market has witnessed drop in open interest by 13.19% to settled at 5250 while prices up 20 rupees.
Now MCX Cotton is getting support at 19090 and below same could see a test of 19010 levels, and resistance is now likely to be seen at 19260, a move above could see prices testing 19350.
Cotton yesterday settled up by 0.1% at 19170 gained on short covering after the news that the International Cotton Advisory Committee expects global prices of cotton to rise due to lower ending stock in 2019-20 (Aug-Jul), the committee said in its report for December.
The agency forecast global cotton ending stocks to decline to 18.0 mln tn from 18.27 mln tn estimated the previous month.Global cotton production is seen steady at 25.92 mln tn in the ongoing season, while global supply of cotton in 2019-20 is projected at 44.19 mln tn.
It has maintained its estimate for global cotton consumption at 26.2 mln tn. Global exports of cotton are at 9.41 mln tn.The state-owned company is also the government's nodal agency for purchases under the minimum support price scheme.
Last year, the agency commenced commercial operations at the end of March. The agency has floated a tender to purchase cotton at 39,400-39,500 rupees per candy (1 candy = 356 kg) from the open market through an electronic auction.
Procurement under MSP in the current 2019-20 (Oct-Sep) marketing year has exceeded 5.8 mln bales (1 bale = 170 kg), of which 53% was bought from Telangana. Gujarat, Maharashtra and Telangana are the top three cotton growing states in the country.
While the minimum support price for medium-staple variety of cotton is at 5,255 rupees per 100 kg, and that for long staple at 5,550 rupees per 100 kg. Cotton Corp aims to procure 6.5-7.0 mln bales of the crop under MSP in the current year.
The estimated procurement is over sixfold higher than 1.1 mln bales procured the previous year. The CAI has pegged 2019-20 crop at 35.45 mln bales, compared with 31.2 mln bales last year.
--Cotton trading range for the day is 19010-19350.
--Cotton gained on short covering after the ICA Committee expects global prices of cotton to rise
--Support seen due to lower ending stock in 2019-20 (Aug-Jul), the ICA committee said
--The agency forecast global cotton ending stocks to decline to 18.0 mln tn from 18.27 mln tn
--The minimum support price for medium-staple variety of cotton is at 5,255 rupees per 100 kg
Courtesy: Kedia Commodities