Cotton on MCX settled down by -1.49% at 19210 tracking weakness in spot demand amid profit booking after prices gained on lower output estimates for 2015-16. Moreover, in the kharif sowing progress data released by Government pegged only 9.87 lakh hectares in current season compared to 14.30 lakh hectares last year. Both the Union government and the trade expect cotton acreage to shrink by about 5-7 per cent over last year’s 118 lakh hectares (lh). Currently, CCI is actively auctioning cotton bales from its reserves to keep the supplies adequate.
Delayed arrival of monsoon could affect the cotton acreage in the key growing regions of Central and South India. Moreover, scare of pest attacks such as whitefly and pink bollworm, which caused major losses to farmers last year and the attempts by some State governments to wean away farmers from cotton could shrink the acreage of the fibre crop this kharif season. In North India, where the kharif planting of cotton has already been complete, the acreages are down by about a third to around 10 lh against the normal of 15 lh, according to early estimates.
As per CAI, India has exported around 6.5 million bales of cotton so far during the 2015/16 season, with Bangladesh and Pakistan accounting for more than half of the total exports. Technically market is under long liquidation as market has witnessed drop in open interest by -16.99% to settled at 3079 while prices down -290 rupee, now Cotton is getting support at 18880 and below same could see a test of 18550 level, and resistance is now likely to be seen at 19580, a move above could see prices testing 19950.
–Cotton trading range for the day is 18550-19950.
–Cotton prices ended with losses tracking weakness in spot demand amid profit booking after prices gained on lower output estimates.
–Cotton Association of India has cut production estimate to 341 lakh bales of the fiber in the 2015/16 from 342 lakh bales estimated earlier.
–Moreover, in the kharif sowing progress data released by Government pegged only 9.87 lakh hectares in current season.
–Cotton prices in spot market gained by 230.00 rupees and settled at 19460.00 rupees.
Courtesy : Kedia Commodities