Cotton Down as USDA Hiked its Projection

US Cotton #2 Futures yesterday settled down by -1.16% at 23940 as USDA kept the production estimate unchanged but hiked its projections for U.S. 2021/22 exports, cut ending stocks. Cotton sowing area grows despite delays. Despite sowing of cotton stretching beyond the ideal sowing time in Punjab, it is close to reaching the target for 2021-22. The state agriculture department had the target of sowing cotton on 3.25 lakh hectares the crop had been sown over 3.01 lakh hectares. New figures show global cotton stock levels are set to increase to 22m tonnes by the end of 2020/21 as the stocks-to-use ratio declines. According to the latest update from the International Cotton Advisory Committee (ICAC), China’s stocks, however, are expected to decline as the rest of the worlds expands slightly.
 
Cotton consumption is expected to increase by 2% to 25.3m tonnes as the global economy continues to recover. Decreases in Brazil, India and the US have caused a reduction in the 2020/21 global production estimate but cotton production — along with consumption and trade — are all expected to increase in 2021/22: Production is expected to increase by 5% to 25.5m tonnes, with increases in planted areas in the US and West Africa. In the spot market, Cotton gained by 10 Rupees to end at 24470 Rupees.
 
Technically market is under long liquidation as the market has witnessed a drop in open interest by -5.33% to settled at 4477 while prices down -280 rupees, now Cotton is getting support at 23610 and below same could see a test of 23290 levels, and resistance is now likely to be seen at 24260, a move above could see prices testing 24590.
 
Trading Ideas: 
# Cotton trading range for the day is 23290-24590.
# Cotton dropped as USDA kept the production estimate unchanged but hiked its projections for U.S. 2021/22 exports, cut ending stocks. 
# Cotton stock levels are set to increase to 22m tonnes by the end of 2020/21
# According to the latest update from the ICAC, China’s stocks, however, are expected to decline as the rest of the worlds expands slightly.
# In the spot market, Cotton gained by 10 Rupees to end at 24470 Rupees.