Cotton on MCX settled up by 3.91% at 23650 as cotton output is likely to decline 12.4 per cent to hit the lowest in five years for the current crop year (October 2015–September 2016), due to crop damage in major producing states of India. The Cotton Advisory Board (CAB) has lowered the forecast and now estimates the output at 33.8 million bales (a bale is 170 kg) for the current crop year, as against 38.6 million bales the previous year.
The board lowered the output due to crop damage in major producing states. Given, the widespread pest attack on Bt cotton crops, the yield per hectare has dipped to 482 kgs from 511 kgs. The area under cotton has dipped by 7% to 119 lakh hectares (lh) against 128 lh registered in the same period last year. Punjab’s output is estimated at 750,000 bales for 2015-16, from 1.3 million the previous year. Haryana has also reported big crop damage, with the estimate at 1.5 million bales this year as against 2.3 million last year. 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. Technically market is under short covering as market has witnessed drop in open interest by -19.86% to settled at 2922 while prices up 890 rupee, now Cotton is getting support at 22904 and below same could see a test of 22157 level, and resistance is now likely to be seen at 24034, a move above could see prices testing 24417.
–Cotton trading range for the day is 22157-24417.
–Cotton prices gained as cotton output is likely to decline 12.4 per cent to hit the lowest in five years for the current crop year.
–The Cotton Advisory Board (CAB) has lowered the forecast and now estimates the output at 33.8 million bales.
–The area under cotton has dipped by 7% to 119 lakh hectares (lh) against 128 lh registered in the same period last year.
–Cotton prices in spot market gained by 320.00 rupees and settled at 22670.00 rupees
Courtesy: Kedia Commodities