Cotton Dropped as Telangana Government is Targeting to Increase the Area by 55–65%

Cotton yesterday settled down by -1.42% at 43610 on profit booking as the Telangana government is targeting to increase the area under cotton by 55–65 per cent to about 28–30 lakh hectares (lh) from last year’s 18 lakh hectares even as the cottonseed industry pegged the growth in cotton acreage at 15 per cent in the upcoming Kharif season, starting July. However, the downside is seen limited due to concerns over production, slow arrivals, and better domestic and export demand. 
 
Domestic cotton arrivals are down 25% or 88.95 lakh bales so far this season to around 238 lakh bales compared to last year. As per the USDA report, all cotton planted area for the coming season (2022) is estimated at 12.2 million acres, up 9 percent from last year. In its latest Apr report, the USDA increased the global cotton production forecast in 2021-22 to 120.2 million bales (1 US bale= 218kg), compared to 119.9 million bales in Feb 2022. India’s crop is unchanged at 26.50 million bales. India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in the production, the government said in a notification. The world's biggest producer of fiber also removed the Agriculture Infrastructure and Development Cess (AIDC) on the imports, the government said. In spot market, Cotton dropped by -220 Rupees to end at 44960 Rupees.  
 
Technically market is under fresh selling as the market has witnessed a gain in open interest by 23.2% to settle at 3616 while prices down -630 rupees, now Cotton is getting support at 43400 and below same could see a test of 43190 levels, and resistance is now likely to be seen at 43910, a move above could see prices testing 44210. 

Trading Ideas:
# Cotton trading range for the day is 43190-44210.
# Cotton dropped on profit booking as the Telangana government is targeting to increase the area under cotton by 55–65 per cent to about 28–30 lakh hectares
# India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in production.
# India's cotton output is likely to fall to 33.51 million bales in the current year from last year's 35.3 million bales, estimates CAI.
# In spot market, Cotton dropped by -220 Rupees to end at 44960 Rupees.