Cotton on MCX settled down -2.75% at 21890 on profit booking after prices gaining on lower supplies of cotton in domestic market. CCI has decided to sell procured cotton to textile mills. To increase supplies, government decided that the Cotton Corporation of India (CCI) will sell its existing stock purchased under minimum support price to MSME spinning mills on account of recent spurt in cotton prices. The Cotton Advisory Board (CAB) has lowered crop production estimate by 12 % to 338 lakh bales (lb) in 2015-16 against 386 lb last year but estimated a comfortable cotton supply position of 43 lb for the cotton season of 2015-16.
Cotton acreage in the country is likely to fall to the lowest in seven years in the 2016-2017 as farmers in key growing area of Gujarat, Maharashtra and Telangana may switch to other crops. As per latest estimate by government, cotton is planted in 75.41 lakh hectares in the country, down by 19 per cent against 93.22 lakh hectares last year as on 15-Jul- 16. Cotton sowing progress increased by more than 100% on w-o-w basis due to good the progress of monsoon rains.
Currently, in Gujarat, acreage is lower by 41.2% at 13.65 lakh hac, compared to 23.2 lh a year ago while in Maharashtra, largest area under cotton, down by 18.1% at 28.9 lha compared to 35.3 lha a year ago. Technically market is under long liquidation as market has witnessed drop in open interest by -25.44% to settled at 856 while prices down -620 rupee, now Cotton is getting support at 21643.4 and below same could see a test of 21396.7 level, and resistance is now likely to be seen at 22333.4, a move above could see prices testing 22776.7.
–Cotton trading range for the day is 21397-22777.
–Cotton prices dropped on profit booking after prices gaining on lower supplies of cotton in domestic market.
–The Cotton Advisory Board (CAB) has lowered crop production estimate by 12 % to 338 lakh bales (lb) in 2015-16.
–Cotton acreage in the country is likely to fall to the lowest in seven years in the 2016-2017 as farmers in key growing area may switch to other crops.
–Cotton prices in spot market gained by 380 rupees and settled at 22850.00 rupees.
Courtesy: Kedia Commodities