Cotton settled flat as prices pared gains on profit booking after gaining due to rising demand from traders and stockists at the domestic spot market. Further, expectation of lower production from major producing belts of the country also added support to cotton prices’ uptrend. Cotton production in India, the world's top grower, will recover less rapidly than previously thought, as weak rains limit yield recovery, US officials say. Yields will tick up, after a decent monsoon across many areas, but by barely by enough to outweigh the sharp drop in sowings. "Despite a generally good monsoon, below normal rains in some cottonspecific growing areas is expected to lead to yields that are lower than the USDA official forecast," the USDA's Delhi bureau warned.
The US Department of Agriculture's bureau in New Delhi saw the country's cotton crop at 26.50m bales, barely higher than the six-year lows touched last season. The USDA's official forecast had the crop recovering to 27.00mb bales, from 26.40m bales in 2015-16. Cotton plantings in India are forecast to fall to a seven-year low of 11.00m hectares, down from 11.90m hectares in 2015-16. Cotton sowing in Gujarat, major fibre producing state, slumped by 20% to 2.42 million hectares up-till Jul 25 on late arrivals of monsoon.
Total cotton sowing till Jul 25 at 2.42 million hectares compared to previous year sowing of 2.03 million hectares with rainfall average at 25.92% as compared to 30.99% previous year. Technically market is under long liquidation as market has witnessed drop in open interest by -0.22% to settled at 3664, now Cotton is getting support at 20420 and below same could see a test of 20340 level, And resistance is now likely to be seen at 20580, a move above could see prices testing 20660.
--Cotton trading range for the day is 20340-20660.
--Cotton settled flat as prices pared gains on profit booking after gaining due to rising demand from traders and stockists
--According to preliminary report by the government, cotton sowing has been covered under 96.48 lakh hectares compared to 105.68 lakh hectares during the same period previous year.
--Cotton plantings in India are forecast to fall to a seven-year low of 11.00m hectares, down from 11.90m hectares in 2015-16.
--Cotton prices in spot market gained by 270.00 rupees and settled at 22010.00 rupees.
Courtesy: Kedia Commodities