Source: https://in.investing.com

AJAY KEDIA | Commodities Analysis

2022-12-07

Cotton yesterday settled down by -0.25% at 31690 as India’s domestic cotton demand for the 2022-23 season up to September is estimated to be lower by about 18 lakh bales (170 kg each) at 300 lakh bales or nearly 6 percent less than last year’s 318 lakh bales.

According to the Punjab Mandi Board data, the cotton crop has seen the slowest arrival in the last five years even as the average rate is the highest since 2018. Punjab is expected to have produced 20 lakh quintals against 29 lakh quintals produced in the 2021-22 season. Arrivals are lower as farmers are holding cotton in anticipation of higher prices in the near term. India is likely to produce 34.4 million bales of cotton in the 2022/23 season that started on Oct. 1, up 12% from a year ago after farmers expanded the crop area.

India’s cotton output for the season ended September 30, 2022, fell to 307.5 lakh bales (against 360.13 lakh bales estimated at the beginning of the season in October last year. This is the lowest since 2007-08 when the production was 307 lakh bales. The latest US Department of Agriculture cotton projections for 2022/23 indicated a slight increase from 2021/22 for world cotton production and lower global demand estimates for 2022/2023.

Production in the US, the world’s largest exporter of cotton, was seen about 1.5% higher, at 14.0 million bales, as a decrease in the Southwest is more than offset by increases elsewhere. Meanwhile, global cotton consumption is projected to be 650,000 bales lower this month, with a 300,000-bale cut to mill use in Pakistan and Bangladesh. In the Spot Market, Cotton dropped by -710 Rupees to end at 32180 Rupees.

Technically market is under long liquidation as the market has witnessed a drop in open interest by -1.02% to settle at 2531 while prices are down -80 rupees, now Cotton is getting support at 31600 and below the same could see a test of 31520 levels, and resistance is now likely to be seen at 31780, a move above could see prices testing 31880.

Trading Ideas:

# Cotton trading range for the day is 31520-31880.

# Cotton dropped as India’s domestic cotton demand for the 2022-23 season is estimated to be lower by about 18 lakh bales.

# USDA cotton projections for 2022/23 indicated a slight increase from 2021/22 for world cotton
# Punjab’s cotton crop has seen the slowest arrival in the last five years even as the average rate is the highest since 2018.

# In the Spot Market, Cotton dropped by -710 Rupees to end at 32180 Rupees.

(Source: https://in.investing.com)