Kedia Advisory | Commodities News
Cotton candy saw a marginal uptick of 0.13% yesterday, closing at 60,980, driven by concerns over supply from key U.S. growing regions. The 2023/24 U.S. cotton outlook reveals a mixed picture, with higher beginning stocks but lower production, exports, and ending stocks. Surprisingly, large warehouse stocks reported for July 31, 2023, led to an increase in beginning stocks for 2022/23.
However, the 2023/24 U.S. production forecast dipped by 860,000 bales this month, mainly in the Southeast and Southwest regions. While consumption remained steady, exports decreased by 200,000 bales, and ending stocks dropped by 100,000 bales.
The season-average price for upland cotton in 2023/24 is projected at 80 cents per pound, up 1 cent from the previous month. On the global front, the 2023/24 world cotton projections reflect lower beginning stocks, production, consumption, trade, and ending stocks compared to the previous month's data. In India, cotton cultivation faced challenges with a 3.65 lakh hectare reduction in sowing, primarily due to poor monsoon conditions in Gujarat.
The closure of major mills and low stock levels of old cotton crops also contributed to tight local supplies. The new cotton crop has begun arriving in parts of North and South India, with prices hovering above the minimum support price (MSP). Early arrivals, around 3,000 bales daily, are expected to pick up post-September 15 as demand strengthens.
Telangana witnessed a slight decrease in cotton cultivation due to unfavourable seasonal conditions. Cotton picking is set to gain momentum in the state towards the second or third week of November. The central government's pre-sowing price forecast for cotton in 2023-24 anticipates normal rainfall and an expansion in crop area. In the Rajkot spot market, prices ended at 29,387.25 Rupees, marking a slight decline of -0.13%.
From a technical perspective, the market experienced short covering, with open interest dropping by -1.03% to 96 contracts. Prices rose by 80 rupees. Key support levels for Cotton candy are at 60,820 and 60,660, while resistance is expected at 61,120, with the potential for prices to test 61,260. (Source: in.investing.com)