Cotton Gained as the Area of Cultivation has Reduced During this Kharif Season

Cotton yesterday settled up by 0.31% at 25580 as the area of cotton cultivation in Marathwada has reduced during this Kharif season as more farmers have opted for soybean over the traditional cash crop, implying a gradual shift in the cropping pattern in the region. Cotton sowing has taken place only on 67% of the expected area of 6.97 lakh hectares in the Aurangabad division and 65% of the expected area (3.58 lakh hectare) in the Latur division. India’s cotton ending stocks could be lower than 75 lakh bales (170 kg each) in the current season to September as domestic demand has picked up.  
 
But some estimates are pegging them higher than 100 lakh bales against a record 120-plus lakh bales last season. CCI, which had nearly 207 lakh bales of cotton stocks, could be left with 18 lakh bales by the end of the season, the CMD said, adding that most of the sales were meant for domestic consumption. Some trade experts expect mills’ consumption to top 300 lakh bales, though Southern (NYSE:SO) India Mills Association (SIMA) Secretary-General K Selvaraju said the shutdown due to the Covid pandemic could lower the offtake below CCPC projections. In the spot market, Cotton gained by 150 Rupees to end at 25530 Rupees.  
 
Technically market is under short covering as the market has witnessed a drop in open interest by -9.66% to settled at 3770 while prices are up 80 rupees, now Cotton is getting support at 25470 and below same could see a test of 25360 levels, and resistance is now likely to be seen at 25680, a move above could see prices testing 25780.  

Trading Ideas:
# Cotton trading range for the day is 25360-25780.
# Cotton prices gained as the area of cotton cultivation in Marathwada has reduced during this Kharif season.
# India’s cotton ending stocks could be lower than 75 lakh bales in the current season as domestic demand has picked up
# CCI said cotton exports would exceed 70 lakh bales and the current shipments were competitive globally.
# In the spot market, Cotton gained by 150 Rupees to end at 25530 Rupees.