Karvy Commodities report on Cotton
Cotton and Kapas futures extended its rally on active buying by millers against shrinking supply of good quality of cotton stocks. Moreover, rising possibilities of shifting of area from cotton to pulses in northern region also added bullishness to cotton futures. Fresh long accumulation was seen for next month contract at MCX as open interest increased by about 17.41% whereas prices rose by 0.8% to Rs.17800/bales of 170 kg each. Similarly, near month cotton contract moved up by 0.75% to Rs.17560/bales yesterday.
Likewise, Spot prices of cotton also moved up on increasing domestic demand from millers. Most traded Gujarat S – 6 cotton hovered at Rs.35200 to Rs.35800 per candy at Rajkot Market. About 12,000 to 15,000 bales of cotton arrived in Gujarat yesterday.
The Benchmark Kapas contract at NCDEX continued its bullish trend yesterday, gained 0.22% and closed at Rs.897.50/ 20kg. However, NCDEX near month cocud contract wiped out most of the gains yesterday in terms of profit booking and closed at Rs.2228/quintal, down by 0.5% from the previou s close.
At global front, ICE cotton traded on positive bias yesterday as near month contract rose by 2.54% to 63.01 cent/lb, whereas next month contract settled at 62.45 cent up by 1.81% against the last trade.
The benchmark of World cotton prices Cotlook A Index closed at 70.05 cent on Monday, higher by 1.0 % from the previous close.
Cotton futures are expected to trade on mixed to higher during today’s session.Active buying from millers amid tigh tening supply of good quality of cotton stocks is likely to support the uptrend of cotton futures. Beside, reports of lower sowing of cotto n in northern amid weakening of Indian currency could be other reasons to keep cotton prices strong in coming days. Cotton sowing has started in northern region and recorded lower so far as farmers are preferring pulses against the cotton due to better re turn expectations. However, better monsoon expectation in year 2016 – 17 may spur farmers to increase area under cotton in central region which may compensate the estimated acreages losses in northern region.